1951-04-16

HOUSE OF COMMONS DEBATES


[Stage Direction]
Monday, April 16, 1951


Hon. J. J. McCann (Minister of National Revenue) moved: for leave to introduce Bill No. 198, to amend the Customs Act.


Mr. Knowles:: Explain.


James Joseph McCann: Mr. Speaker, the purpose of the changes set out in this bill is to clarify certain sections and to lay down certain procedures which will facilitate both the administration and enforcement of the act.


Stanley Howard Knowles: Will the minister explain the explanation?


Mr. Abbott:: The explanation is very clear and concise.
Motion agreed to and bill read the first time.



QUESTIONS

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)

Mr. Bryce:: 1.	Have any employees of the income tax division been dismissed from January 1, to March 31, 1951?
2.	If so, how many?


Mr. McCann:: 1.	Yes.
2.	Five.


DEFENCE PRODUCTION
Mr. Lennard:: 1.	Has the Department of Defence Production placed any orders for synthetic detergents?
2.	If so (a) when; (b) in what quantities; (c) with whom were the contracts placed?


Mr. Mcllraiih:: 1.	No.
2.	Answered' by No. 1.



UNEMPLOYMENT INSURANCE


Mr. Knowles:: 1.	How much money was paid out in the form of supplementary unemployment insurance benefits (a) in 1950; (b) in 1951?
2.	How much money has been paid into the unemployment insurance fund earmarked for the payment of supplementary benefits?


Mr. Gregg:: 1. (a) To December 31, 1950-
classes 1 and 2	$2,761,402.86
(less refunds to March 31/51) 1,791,483.95
Total	$4,552,886.81
(b) In 1951, to March 31-
classes 1 and 2	$3,168,046.66
classes 3 and 4	 27,877.55
Total	$3,195,924.21
2. (a) The fund has been credited from appropriations with $1,791,483.95, the amount paid to classes 3 and 4 for the period February 28 to April 15, 1950, in accordance with section 87F(1) of the act.
(b) As from July 3, 1950, the sum of one cent per day was added to the contributions payable by employers and employees to provide supplementary benefits for classes 1 and 2. This additional contribution is included in the regular stamps, meter impressions and bulk payments and is not specially earmarked in the accounts of the commission. In accordance with the statute, the amount received up to March 31, 1952, will be determined, and if the amount expended exceeds the amount received from this additional contribution the fund will be reimbursed from moneys provided by parliament.
Note: Classes 1, 2, 3 and 4 are described in section 87 tb) of the Unemployment Insurance Act.



CIVIL SERVICE SUPERANNUATION

Mr. Balcom:: 1.	Was any amount added to the superannuation fund by direct vote of the government during the past twelve months?
2.	If so, what amount, and what effect did it have on present paid retirement allowances?


Mr. Sinclair:: 1.	Yes.
2.	$6,831,261.95-vote No. 103, main estimates, 1950-51; $75,000,000-vote No. 587, further supplementary estimates (2), 1950-51.
These payments will not have any effect on allowances presently being paid. See page 1395 of Hansard, March 19, 1951, for explanation of $75,000,000 item.

Questions



RURAL MAIL CARRIERS


Mr. Carroll:: 1.	Were rural mail contractors given any cost of living bonus or any increase in their contracts during the last war?
2.	If so. what amount?
3.	Were such bonuses or increases discontinued?
4.	If so, when?


Mr. Langlois (Gaspe):: 1.	Yes.
2.	(a) A 5 per cent cost of operation bonus in all -cases where rates were established on or before April 29, 1941, with increase to apply for work performed as from August 1, 1941.
(b) A wartime bonus as from June 17, 1943. The amounts varied in accordance with -conditions of the particular service. The original cost of operation bonus was assimilated to the wartime bonus where granted,
3.	No. They were incorporated into existing contract rates for the period of the contract.
4.	See answer to No. 3.



NATIONAL FILM BOARD


Mr. Browne (St. John's West):: 1.	Did the national film board produce an animated cartoon in 1949 illustrating the following songs: "Camptown Races," "Grandfather's Clock," "Bury Me Not on the Lone Prairie," "Ta-ra-ra Boom-de-ay"?
2.	If so, what was the name of same, and how much did it cost?
3.	How many copies were prepared?
4.	Has this film been exhibited recently in the United States?
5.	If so, what revenue has been received?
6.	Have any other similar films been processed by the national film board since 1949?
7.	If so (a) what are their titles: (b) how much did each cost; (c) what revenue has been received from them?
8.	What is the purpose of producing films of this kind?


Mr. Winters:: 1.	Yes.
2.	"Four Songs by Four Gentlemen." Cost was $5,147.63.
3.	79.
4.	Yes.
5.	None.
6.	No.
7.	Answered- by No. 6.
8.	For showing with information films to audiences in rural areas of Canada. The primary purpose is to contribute toward a balanced program and to add interest.



QUESTIONS PASSED AS ORDERS FOR RETURNS

[Stage Direction]
ST. CYPRIEN, QUE., TELEPHONE SYSTEM Mr. Courtemanche:
1.	Has the government contributed to the construction of a telephone line or system in the parish of St. Cyprien or St. Luc de Dorchester, province of Quebec?
2.	If so, when, and what amount?
3.	Does the government hold any security on the property of the said system?
4.	What was the name of the public body, company, owner or owners at the time of the establishment of such system or line?
5.	Does the government own the said system at present, or has the government ever been the owner thereof?
6.	If so (a) has the government leased it; (b) when was it so leased; (c) to whom; (d) for what periods; (e) on what terms?
7.	Since the establishment of the said system, and for each year during that period, what has been the amount of grants made to the owners or lessees?

Mr. Brooks:: 1.	How many applications were received from the Canadian merchant navy veterans for vocational training as provided by order in council 5983, passed on or about the 29th day of December, 1948?
2.	How many veterans were accepted for such training?
3.	How many were rejected on the ground (a) that they had served in ships registry other than Canadian; (b) that they had not signed a manning pool agreement; (c) that they were not in receipt of special bonus; (d) that they already had employment or a vocation; (e) for other reasons?



PERIODICAL &quot;COURIER&quot;


Mr. Coldwell:: 1.	Has the federal government placed any advertising in the periodical Courier, of 1935 Halifax street, Regina, since January 1, 1949?
2.	If so, how much has been paid the Courier for
advertising by the federal government or any agent thereof (a) during the calendar year 1949;	(b)
during the calendar year 1950; (c) to date in 1951?



MOTION FOR PAPERS


Mr. White (Middlesex East):: For a copy of all correspondence, telegrams, agreements to lease or purchase, leases, contracts, specifications and other documents exchanged between the government of Canada and Westmount Realties Limited, Montreal, relative to the income tax building, Dundas street (civic numbers 388, 390, 392, 394), London, Ontario. Also a copy of all correspondence relative to this building exchanged between the government of Canada and the municipality of the city of London, or any official thereof, between the period November 12, 1948, and April 10, 1951.



FLOOR PRICE


[Stage Direction]
On the orders of the day:
Mr. J. A. Charlton (Brant-Weniworih):: should like to direct a question to the Minister of Agriculture. Is the government prepared to accept the proposal of the cream producers of Canada to establish a floor price of sixty-two cents a pound for butter as a means of ensuring a reasonable supply for next winter?


Right Hon. J. G. Gardiner (Minister of Agriculture):: The matter is under consideration, and when the government is prepared to make an announcement, it will be made.


Mr. Fraser:: When will that be?



AGRICULTURAL PRODUCTS


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: should like to direct a question to the appropriate minister. On March 19 this house passed a motion of mine for the production of papers with respect to the correspondence between British Columbia and the federal government in connection with compensation for fruit trees destroyed by frost in British Columbia. Has the government received the permission of the government of British Columbia with respect to the correspondence, and when will the return be tabled?


James Garfield Gardiner: The government has had two or three different proposals from the government of British Columbia, and on each occasion the same decision has been reached as was reported to the house some days ago, namely, that the amount involved is not considered to be beyond the capacity of the province to take care of, and that it is one of these matters which is generally considered to be a provincial responsibility, if it is the responsibility of anyone to assist.


Mr. Fulton:: May I ask another question
dealing with the same matter? Has the government reached any decision, and if so, what decision, on the later representations which I understand were made during the course of the past week or so on the same subject by the fruit growers of British Columbia?


James Garfield Gardiner: This is one of the matters, and it is the matter which was considered last. It was considered not earlier than today, 80709-1311
Inquiries of the Ministry and the same decision was reached on it as had been reached on the other.


Herbert Wilfred Herridge: The Minister of Agriculture did not answer my question. I finally asked:
Is the government going to table the correspondence and documents mentioned in the motion for the production of papers?


James Garfield Gardiner: There is no objection to that, Mr. Speaker. The documents, I think, were tabled up to a certain date; there has been other correspondence since, and that can be tabled as well.



LONG-TERM LOANS FOR REHABILITATION OF ORCHARDS

[Stage Direction]
On the orders of the day:
Mr. O. L. Jones (Yale):: Mr. Speaker, I
should like to ask the Minister of Agriculture a question which may be regarded as supplementary to the one which has just been asked. Was consideration given to the request of the fruit growers for long-term loans at low interest rates to rehabilitate their orchards?


James Garfield Gardiner: Yes; that was a question which was up for consideration today, and the same decision was reached with regard to it as had been reached previously on the other question.



DEFENCE PRODUCTION


[Stage Direction]
On the orders of the day:
Mr. Angus Maclnnis (Vancouver East):: May
I have an answer to the question I asked the Minister of Defence Production on Friday, concerning correspondence with the Sheet Metal Association of British Columbia? Has the minister the information for me?
Right Hon. C. D. Ho we (Minister of Defence Production): I regret that I have not the material to answer the question. I sent for it this morning. I was asking my secretary a few minutes ago whether it had arrived, but it has not. I assure the hon. member that the matter is in hand and he will get the answer tomorrow.



SUPPLY FOR MANUFACTURE OF HOT WATER TANKS

[Stage Direction]
On the orders of the day:
Gordon Knapman Fraser: should like to direct a question to the Minister of Defence Production. When he is
2042	HOUSE OF
Inquiries of the Ministry getting the information for the hon. member for Vancouver East (Mr. Maclnnis) regarding steel, will he take note to see if it is possible to obtain more steel for hot water tanks? There is a definite shortage of them for replacement purposes.


Right Hon. C. D. Howe (Minister of Defence Production):: I am afraid I cannot offer my hon. friend any prospect of increasing supplies of steel for hot water tanks.


Gordon Knapman Fraser: There is a definite shortage.


Clarence Decatur Howe: I know.



REQUEST FOR STATEMENT ON SUPPLY SITUATION

[Stage Direction]
On the orders of the day:
Mr. J. H. Harris (Danforth):: Mr. Speaker, I appreciate what has been done with regard to steel and iron, but I had hoped that within the next three or four days-and I am in no hurry at all-the Minister of Defence Production, who has charge of matters connected with steel, and who perhaps is not too much worried about it, as, indeed, none of the rest of us are, might feel disposed to make a statement to the house as to how we are getting along in connection with steel. There are so many projects contemplated that a word from the minister may encourage the spending of some of that surplus money, about which the Minister of Finance is worried, on certain construction projects. The minister might give some thought to the question of restrictions which are not yet in the books, and, in doing so, he might give us some idea of how we may be permitted to spend some of the money on projects which are still under way.


Clarence Decatur Howe: Mr. Speaker, my hon. friend has suggested that the minister is not too much worried about steel. I should like to correct that impression.


Joseph Henry Harris: I know he is worried all the time.


Clarence Decatur Howe: The minister is very much worried, and about steel in particular.


Joseph Henry Harris: Steel supply is getting better all the time.


Clarence Decatur Howe: I can say the situation is such that if anyone has any doubts about starting a project I would urge him not to start it; and even if he is pretty firm about starting, I would urge him to reconsider.


Joseph Henry Harris: But what about some of those projects which are half-finished?


Clarence Decatur Howe: We will try to finish them.


Joseph Henry Harris: Thank you; that
is the answer I wanted.


Clarence Decatur Howe: I will try to give a more complete report later on.


Joseph Henry Harris: There is no hurry. CIVIL SERVICE
inquiry as to order in council with respect to OUTSIDE work
On the orders of the day:


Stanley Howard Knowles: I should like to direct a question to the Minister of Finance, based on a Canadian Press dispatch in a recent issue of the Toronto Globe and Mail. Has an order in council been passed permitting civil servants to take outside jobs so as to supplement their government earnings?


Douglas Charles Abbott: Speaking from memory, Mr. Speaker, I think there is an order in council outlining the position of civil servants in that regard, but I would not be prepared to say what its terms are. I imagine it has been tabled with other orders^ in council. Anyway, I shall make inquiries and give my hon. friend an answer in a day or two.



EXTERNAL AFFAIRS


[Stage Direction]
On the orders of the day:
Edmund Davie Fulton: 1 should like to direct a question to the Secretary of State for External Affairs. Has his attention been drawn to a Canadian Press dispatch which appeared in this morning's Montreal Gazette, and I believe in other papers, which places an interpretation on the minister's speech delivered recently in Toronto? If so, I should like to know whether it is an official interpretation of his speech.


Some hon. Members:: Oh, oh.


Edmund Davie Fulton: Whether it is a correct interpretation.


Hon. L. B. Pearson (Secretary of Slate for External Affairs):: I read my Gazette this morning, and I found nothing in that newspaper which was an official interpretation of anything that I have ever said.


Edmund Davie Fulton: May I ask whether it was the correct interpretation?


Mr. Sinnoit:: Put it on the order paper.


Lester Bowles Pearson: It was a speculative interpretation.


Mr. Diefenbaker:: May I ask the Secretary of State for External Affairs, having regard to his answer to the hon. member for Kamloops in which he referred to speculative matters,

whether, when he made his speech in Toronto, he was aware of the fact that General Mac-Arthur was going to be dismissed?


Lester Bowles Pearson: I can answer that question very quickly-and I am glad to have the opportunity to answer it, because of reports which have appeared in the press. I had no knowledge whatever of General MacArthur's dismissal before that dismissal was announced in the newspapers.


REPORTED ARREST OF FIVE MISSIONARY SISTERS BY CHINESE COMMUNISTS
[Stage Direction]
On the orders of the day:
Mr. Lomer Brisson (Saguenay):: I should like to direct a question to the Secretary of State for External Affairs. I have given him notice of my question'. Has the government taken any action with regard to the imprisonment of five Canadian sisters in Canton?


Lester Bowles Pearson: The hon. gentleman was good enough to give me notice of this question, which deals with a matter on which other hon. members have already expressed considerable interest, notably the hon. member for Charlevoix (Mr. Maltais) and the hon. member for Kamloops (Mr. Fulton). When they brought the matter to my attention last week I told them that I was not at that time in a position to comment, but I am able to make a short statement concerning it now, and I shall be glad to do so. That statement will also, Mr. Speaker, in part at least, cover the question on today's order paper in the name of the hon. member for Chicoutimi (Mr. Gagnon).
The Canadian government has learned with grave concern that five Canadian nuns of the Order of the Immaculate Conception, who have been operating with selfless devotion an orphanage in Canton, have been detained and that their orphanage has been taken over by communist Chinese authorities. The most atrocious and fantastic crimes have been attributed to the five sisters by press reports and radio broadcasts emanating from China. The Canadian government deeply regrets that irresponsible accusations which, it is sure, are unfounded have been given so much publicity.
In the absence of a Canadian diplomatic mission in China the Canadian government has availed itself of the good offices of the United Kingdom charge d'affaires in Peking. This officer has been informed of the great concern of the Canadian government for the
Inquiries of the Ministry five sisters and has assured us that he will lose no opportunity to do anything he can to help them.
There is no evidence that formal charges have so far been laid by the Chinese authorities. The agitation against the five sisters at the present time seems to be chiefly local. As I have already said, it is inconceivable that they could be considered guilty of the crimes which they are alleged to have committed, and the local communist officials must surely know this. I hope, therefore, that the central people's government will allow the sisters to return freely to Canada.
It may take considerable time before the case of these sisters can be cleared up, and the Canadian government is anxious that nothing should be done or said at this time which could conceivably worsen their position.
I should like once again to assure the house that the government is doing everything it can to watch over the interests of these five unjustly accused sisters, and to assure the house further that everything is being done and will be done which will help them without increasing the danger to them.


FISHERIES
[Stage Direction]
On the orders of the day:
Mr.  W. Chester S. McLure@Queens: Mr. Speaker, I should like to ask a question of the Minister of Fisheries (Mr. Mayhew) or, in his absence, his parliamentary assistant. Perhaps the parliamentary assistant would take my question as a notice and give an answer tomorrow. What is the quota to the United Kingdom on the shipment of lobsters for the year 1951? Is the quota based on cases or on dollar value?


Mr. Speaker:: As the hon. member does not expect an answer today, I suggest that the question be placed on the order paper. May I also say at this time that a number of the questions that are being asked on the orders of the day are quite long. Questions on the orders of the day should be urgent; they should be brief and should require only short answers. I would ask hon. members to try to observe the rules in this matter.


Mr. McLure:: My question was short, and I supposed it would have been answered if the Minister of Fisheries had been here.


Mr. Speaker:: Probably the hon. member's question was no more out of order than some of the others. In his case the parliamentary assistant, who is here, might take the question as a notice and answer it tomorrow.

The Budget-Mr. J. M. Macdonnell Mr. J. Watson MacNaught (Parliamentary Assistant to the Minister of Fisheries): I shall be very glad to do so.


THE BUDGET
[Stage Direction]
The house resumed, from Tuesday, April 10, consideration of the motion of Hon. Douglas Abbott (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
Mr. J. M. Macdonnell (Greenwood):: Mr. Speaker, we are living at a time so critical in the history of our country and of civilization that no one with any proper sense of responsibility should allow himself to be critical just for the sake of trying to score an advantage. Whether or not we are fortunate enough to come through this period without war, I suppose it is quite likely that history will look back to the spring of 1951 as a time of. critical significance.
Everywhere we turn, in the Far East to Korea, in the Near East to Iran, and on this continent toward Washington, dangerous events are crowding one on another.
And yet this very fact means that we must deal faithfully with the situation before us. Everyone will sympathize with the burden carried by the minister, but its very heaviness means that the decisions which he makes are specially charged with possibilities of good or evil for the citizens of Canada.
There were great problems ini wartime, but there was also an awareness in men's minds of the tremendous events that they were living through, and an acceptance of the challenge in terms of effort, of sacrifice, of courage and forbearance. Today we have almost the same danger, but not the same spirit. We are facing big events, but it is doubtful if we have the largeness of mind which is necessary. Somehow we must find the proper spirit, but, look as we will, it is hard to discern it now.
Hackneyed words come to the mind- hackneyed but true: "Where there is no vision the people perish"; and surely we are entitled to ask that the vision which we need should come from those who have been chosen to guide the people.
True, the minister has many of the words of admonition-"save", "work", "restraint". But the voice of authority and inspiration is not present in the government, and so we grope along in the dark.


The Minister of Finance (Mr. Abbott) said one thing we can all agree with in the little homily at the end of his speech:
Tonight is the annual occasion when we count up the cost of our policies in terms of money. That cost is high.
We can agree with those words of the minister. I would say that the cost is high. It would have been high in any event, even if everything had been done. But it is higher than it should have been. Also I would seek to satisfy the house and the people of Canada that, as things are going now, we are not going to get what we are paying for. I shall try to explain that later.
Two great issues face us, as the minister said: "the pursuit of peace and the control of inflation". The ministers of national defence and defence production, we may say, are charged with the pursuit of peace, or, in other words, with our program of defence production. The Minister of Finance is charged with the other great problem, the control of inflation.
Stalin was fond of quoting Lenin to the effect that the way to overthrow a capitalist state is to debauch the currency. We have no doubt that Moscow will be quick to appreciate the difficulties which come to a free economy when a large defence program is imposed on a situation of full employment where factors of inflation are already evident. When we recall that from January to September 1950 the living index rose about eight points it is clear that the factors of inflation were present at the time when this new burden was imposed on us.
It is clear that inflation is especially dangerous to free countries where economic results are produced by the decision of free agents working in competition with each other. On the other hand, the police state regiments everyone and its logical outcome is slave labour; therefore it is not by any means so vulnerable to inflation.
There are indeed two alternative dangers which we face. If inflation should get out of control, then the communist predictions and the communist textbooks will be proved true and our system will be vastly weakened. If on the other hand the dangers should scare us into permanent rigid and universal controls, we would be in great danger of slowing down our effort.
The next couple of years might well be critical and even decisive. We will need capacity, resourcefulness, patience and forbearance. The pressures will be great and as the defence program gets into greater swing they will be greater. The situation we face now is easy enough to describe; it

has often been described as being a case of "too much money chasing too few goods". It is easy enough to describe the cure as being "more production and less consumption". The other day I quoted briefly, as reported at page 1784 of Hansard, a well-known economist who says:
If when I get a larger income in dollars for myself I produce at the same time correspondingly more than I produced before, this will not raise my neighbour's cost of living.
But as often as I get a larger income without at the same time producing correspondingly more than I produced before, my success in getting more income for myself must raise my neighbour's cost of living.
And in parallel with this, whenever my neighbour gets a larger income in dollars for himself and at the same time enlarges his own output correspondingly, he will not raise my cost of living.
But as often as he gets a larger income without at the same time producing correspondingly more than he produced before, his own success in getting more income for himself must raise my cost of living.
I suggest that there is common sense in that which we would do well to ponder.
Let me now review the situation upon which our minds are concentrated and which affects us all-the cost of living. Here are the figures for the last sixteen months, the basis of comparison being August, 1939:
January, 1950	 161
April 1	 164
July 3 (after the first impact of Korea) - 167-5
October 2	 170-7
January 1, 1951	 172-5
February 1, 1951	 175-2
March 1	 179-7
It does not need any clairvoyant to know what this means to people with low incomes. The figures speak volumes in themselves. One or two of the letters quoted the other evening by the hon. member for Hamilton West (Mrs. Fairclough) point up the situation. The hon. member for Hamilton West can speak with special authority for the Canadian housewife. One letter has this to say-it will be found at page 1770 of Hansard:
We do not ask for luxuries, but as prices are now, how does the government think an aged person can get even the necessities of life out of $40 per month? Take room rent out, and what is left to live on for a month?
Here is another letter-page 1769:
May I bring to your attention the helplessness of our aged people? There is no union to help them as have the workers; the aged cannot go on strike. You know that $40 will not pay for rent, heat, clothing, food, etc.
I do not need to say more. The widespread distress is a matter of common knowledge, particularly among the aged and many large sections of the white-collar workers, indeed
The Budget-Mr. J. M. Macdonnell among all people who are not highly enough organized to make their increases in pay keep up with the cost of living.
There seems to be only one person I know of who is ignorant of this situation, and that is the Minister of Trade and Commerce (Mr. Howe). The minister said, as reported on page 1762 of Hansard of April 9:
I am sure that we can get along quite comfortably as consumers and still engage in a substantial defence effort.
And a little later:
Unless all-out war comes, Canadians can continue to live well.
I find it hard to realize that a man so realistic as the minister is able to shut his eyes to this situation. But we must remember that the Minister of Agriculture (Mr. Gardiner) has told us that the Minister of Trade and Commerce and he are in a very privilege position. According to the Minister of Agriculture they constitute a kind of triumvirate or big three who are separate, not only from all the rest c f us, not only from all the other members of their own party, but from all other members of the cabinet. Here are the words used by the Minister of Agriculture in referring to the Prime Minister (Mr. St. Laurent), the Minister of Trade and Commerce and himself, as reported on page 1480 of Hansard of March 20:
As long as the three of us remain where we are, I think it will be fairly generally agreed across the country that we have an exceedingly good government.
That remark was a surprise to me. I have always regarded the Minister of Agriculture as a modest man, and I was surprised that he should single out in this way himself and others and attempt to put themselves above all the rest of us. I was reminded of these lines from Julius Caesar with which we were all made so familiar in school:
Why, man, he doth bestride the narrow world Like a Colossus; and we petty men Walk under his huge legs, and peep about To find ourselves dishonourable graves.
It is not for me as a humble member of the opposition to discriminate among the great or near great. It is not for me to say whether that is a fair judgment as between this triumvirate and the other members of the cabinet. I suppose the other members of the cabinet just say to themselves, "That is the minister's way, and we just take it."
But there was another much more striking thing said by the Minister of Agriculture. I think this was one of the most interesting and astonishing things ever said in this house. It does appear to be catching, as I shall show later in the afternoon-and it will not be much later, because I do not wish to indicate
2048	HOUSE OF
The Budget-Mr. J. M. Macdonnell that I am going to go on speaking for hours. Hon. members will recall that there was a certain, shall we say, difference of opinion; anyway there was a different way of describing certain events; I hardly know how to find the correct words. At any rate, this is the way the Minister of Agriculture summed it up. I told you a moment ago how enthusiastically he spoke about himself and the other two members of the big three, and he then went on to speak of himself and the Minister of Trade and Commerce. I suppose we can still call the minister the Minister of Trade and Commerce, although I suppose we shall also be dealing with him mainly under his new ministerial title.
Referring to himself and the Minister of Trade and Commerce, the Minister of Agriculture said, as reported on page 1448 of Hansard of March 20:
One of the reasons why we-
The Minister of Trade and Commerce and himself.
-are satisfied to be where we are is that we both know that we can afford to make statements, knowing that we might be incorrect-
I want to read that again, because that to me is one of the most interesting things I have ever heard in this house or ever hope to hear:
One of the reasons why we are satisfied to be where we are is that we both know that we can afford to make statements, knowing that we might be incorrect because we have a leader who does not make many mistakes.
I am sure we all join in the feeling of enthusiasm that we have a Prime Minister who never makes mistakes; nevertheless it is a strange doctrine announced by the Minister of Agriculture. As I say, it almost seemed' as if it were spreading to the Minister of Finance and1 the Minister of National Defence. I am not suggesting that the Minister of Finance-what shall I say-considers that he enjoys this blessed irresponsibility of being able to make statements knowing that they might be incorrect, but I suppose at times all of us might like to have a dispensation of that kind if we could be sure that it was valid and coming from a responsible quarter.
I have been speaking briefly of the effect that high prices are having on the lives of individuals; but the havoc of high prices is not confined to individuals. High prices, as the Minister of National Defence told the American Arbitration Association, are throwing out of gear the defence program, the important objective for which we are making sacrifices and expect to make so many more. What irony if in the pursuit of peace we organize so badly by letting prices get out


of control that we fail in the objective! Nevertheless the Minister of National Defence has warning words which we had all better consider, and I suggest even the Minister of Defence Production might pay some attention to these words too. The Minister of National Defence spoke to the American Arbitration Association on March 30. I think the minister visited that association not so much in his quality as Minister of National Defence but in his quality as a former adviser of the Chamber of Commerce. I think it was for his work in civil life rather than in the government; nevertheless there he was before the American Arbitration Association. He spoke at length about our defence problem, and after all, that is what he is interested in and knows most about. He said some things which we might very well have thought he might have said to us first before he took the American Arbitration Association into his confidence. Here is what he said:
The armed forces and industry combined must make a frontal attack on the cost of defence equipment. This has become so costly that neither we nor our allies can get what we need-
Note this, Mr. Speaker.
* without going on an all-out war economy.
These are pretty strong words. Here we have again, and not for the first time, two voices in the cabinet. The Minister of Finance has been telling us that we can make do as we are on what we will call a half-and-half basis, or a three-quarter-one-quarter basis, but the Minister of National Defence says: No; neither we nor our allies can get what we need without going on an all-out war economy. I suggest that as these ministers sit side by side they had better get together and find out what is happening. Incidentally they could tell parliament too.
I must say there are some figures I have read which seem to justify very fully what the Minister of National Defence said. For instance, the Toronto Telegram of April 12 has a dispatch which says that a frigate cost $1,700,000 in the last war, and that a subchaser, which I understand does somewhat the same work, now costs $8 million. Certainly that gives one furiously to think.
There are two other things the Minister of National Defence said in the same speech that I think are worthy of the attention of the house. No doubt one of these days the Minister of National Defence himself will come along and tell us something about these things, but I am giving hon. members a little advance information. The minister said further:
Unless you actually see it, it is hard to imagine how defence costs have soared.

Then there is another statement which I find very interesting, for two reasons: first, because of the figures it contains, and second, because it seemed to me to indicate the extraordinarily difficult questions of judgment and decision which are involved in the problem now facing his department. The minister said further:
I am always asking our people if a five per cent increase in performance justifies a fifty per cent increase in cost.
These figures are startling, and I say again they seem to me to indicate the size, the importance and the difficulty of the problems now facing the Department of National Defence as a result of whose decision so many hundreds of millions of our money are going to be gobbled up. I find these extracts from the minister's statement disturbing reading, particularly as I had more or less of a feeling that I wished they had been said here before they were said to the American Arbitration Association. One does not like to say it, but at the moment it almost seems as if the American Arbitration Association were closer to the minister's confidence than we are.
This leads me to make a suggestion. The public accounts committee is about to scrutinize the public accounts relating to defence, which of course come down to March, 1950. There is always a bit of a feeling in the public accounts committee that you are delving into the realms of ancient history. I am not suggesting how it can be avoided, but with the important and immediate decisions that have to be made in the Department of National Defence today it intensifies my feeling that if we are to be prevented in the public accounts committee from looking at anything after March 1950, it would be like having the play without Hamlet. I am hopeful that the government may decide that in this particular case the public accounts committee may carry on its review to a very much later time than March, 1950.
Discussion in a standing committee of course is better than in committee of the whole, for two reasons. First of all, the committee is smaller; you can have a much more informal and useful discussion, and., in the second place, standing committees may have expert witnesses. How important it is at this time to have the fullest information on these problems of immense difficulty such as the one the minister referred to when he said that the difference between five per cent and fifty per cent would have to be considered. How can any matter of that kind be dealt with in committee of the whole? The answer is that it cannot be dealt with in committee of the whole, that parliament should come closer 80709-132
The Budget-Mr. J. M. Macdonnell to the matter. At the moment, as I have said, we really know less than the American Arbitration Association, and we really will not be very much better off after the estimates are through because we sit in this large room, in a large committee, and of course in public.
I suggest that the minister's words are disturbing. They will be disturbing to the public mind, and it is important that everything possible be done to reassure the public mind. After all, that is the duty of members of parliament, and if hon. members are more in the confidence of the government, then we can foster much better the spirit of confidence in the public mind.
How has this difficult situation arisen? Has it just "growed" like Topsy? Let me review it very briefly. After the unfreezing of prices and abandonment of subsidies which came after the last war, prices rose from 119 in 1945 to 123 in 1946, to 135 in 1947, to 155 in 1948, and to 167 in 1950. In 1948 there was an inquiry by the prices committee, and there was a temporary curb on credit, but in the same year there were also highly stimulating procedures at work, procedures invented in 1945 for the purpose of dealing with depression, such as double depreciation, and the boom generated by this and other inflationary measures continued. If I may take a moment of the time of the house I should like to read what I was bold enough to say three years ago about this very thing. Speaking in this house on May 21, 1948, at page 4246 of Hansard I said:
But what I complain about ... is that we continued to use those measures long after it was perfectly clear that we should have done exactly the opposite. Signs of the boom really appeared in 1946, and the methods outlined in 1945 should have been altered then, and altered quickly. Instead, the government continued to use them and even accelerated them. What we needed was a sedative: what we got was a strong tonic. What do I mean by that? I mean that the government did two things. It powerfully stimulated plant expansion by what I think were extravagant inducements in the way of depreciation, and it also continued to pursue an easy money policy, which was the other method of encouragement.
As I say, the government persisted in this technique, which was designed for a depression, long after it was made clear that there was a boom. As I have mentioned in this house before, the Winnipeg Free Press referred to this as the big blunder; while the Hamilton Spectator, in rather racy language, referred to it as the disastrous holiday-mood easy-money era that found politicians and economic pressure groups doing everything in their power to make inflation a permanent institution.
That policy was still in flower when the impact of Korea struck us. One would have

The Budget-Mr. J. M. Macdonnell been entitled then to expect that every effort would be made to overcome the mistakes and failures of the past. One would have expected vigorous efforts immediately; but try as we would, we could not get the government to declare an emergency. We could not even feel that they thought there was an emergency, though the cost of living had risen from 161 in January of 1950 to 169 in September. One wonders how much further evidence was needed to bring about immediate and effective action. In his budget speech on Tuesday evening the minister admitted that virtually nothing had been done-and I shall substantiate that a little later by quoting his words-until parliament assembled and the pressure was put on, if I may say so, by the opposition. Not only was nothing done; it was really worse than that, as is evident from the words of the Minister of Trade and Commerce in this house on February 8. Comparing the present with 1941 the minister said:
This time many people expect the reimposition of the same kind of controls and are governing themselves accordingly.
In other words the minister was calmly informing us that with all the talk of controls that was in the air, the government, by doing nothing, or practically nothing, had stimulated buying for the rise. The minister had quite clearly in mind what was happening when he said people were "governing themselves accordingly," and his words not only did nothing to discourage that practice but I believe his words must have encouraged people to go on, because after all it was dearer then than ever before that the government was thinking about taking steps. It never got past the stage of thinking; nevertheless it stimulated these people to go out and try to beat the gun.
Now let us have a short post mortem of the September session. What did the Minister of Finance do after brave words about dealing with inflation? Well, it seems to me it would be fair to say, in the words of the old proverb, that "the mountains were in labour but all that was produced was a ridiculous mouse". The only thing we had was the instalment buying legislation passed in September, followed by some regulations in November. I believe those were ineffective, if not practically nugatory, and the best proof I can offer in support of that statement is that recently much more effective regulations were passed, and we are now to have an amendment of the instalment buying legislation. But those more effective regulations were passed only a few weeks ago.
Last September the need of credit controls, to which the minister referred the other 


Then there are the corporation tax and the personal income tax. I wish to deal first of all with the commodity taxes and their effect on the cost of living. To the extent that they curb consumer buying they are deflationary, but to the extent that they add to the cost of living they will fail to be deflationary and they may only have the effect, which is widely pointed out, of putting pressure on the taxpayers to use every means in their power to demand pay increases in order to offset the taxes. Of course, if that happens, we know the difficulties that then arise.
Now, the corporation tax:	We must face
the fact that a large part of that will be translated into the price, and will also add to the cost of living. Looking at the other side of the shield, we have the income tax, which will lessen our capacity to pay.
The rises in prices will be immediate and inescapable, and the measures to combat high prices are just beginning and, as the minister very candidly said, they will take time. Failing a miracle, a further rise is inevitable.
The minister made a valiant effort to minimize the effect of the sales tax on the cost of living, but I found him, and I think others found him, very unconvincing. It was an ingenious argument but it will not carry much weight. Furthermore, no one will doubt of course that among the other things included in the other excise taxes, commodity taxes, articles such as stoves, washing machines, and so forth, in the life of the modern family have become practically necessities, however hard it is for some of us who are older to realize that.
And so we have as the primary effect not the lessening of consumption but the driving up of prices. For this reason Mr. Ralston in 1940 refused to recommend an increase in sales tax. He said:
We realize that increases in indirect taxes disguise the burdens imposed by the war, but they are much more likely to distribute these burdens harshly and unfairly. While increases in such taxes may eventually be necessary, we are striving in this budget to deal with the situation ... by direct call on our citizens graded according to their means and responsibilities.
The following year Mr. Ilsley quoted with approval what Mr. Ralston had said, and also refused to increase the sales tax. Of course we are all familiar with the pyramiding effect: where you have the manufacturer, the jobber, the wholesaler, the retailer, you get a mark-up on a mark-up on a mark-up.
Now, let us see the reaction of public opinion, as reflected in the press, to the budget and perhaps in particular to the sales tax. The Windsor Star of April 11 said:
The dominion government has not checked inflation-either courage was lacking or the members of

the government are so completely out of touch with the Canadian people that they don't know what is going on.
The Ottawa Journal of April 11 said:
It would be wrong to say that what Mr. Abbott brought us yesterday was an anti-inflationary budget. All Mr. Abbott seems to have done is to impose levies sufficiently heavy to bring the stuns required for the defence effort, with no theory or nonsense about stopping inflation.
The Windsor Star again:
To think the increased taxes will appreciably reduce the demand for a diminishing flow of goods is to be naive. The higher taxes are more apt to encourage demands for higher wages so the higher cost goods can be purchased.
L'Action Catholique mentions a special aspect which will be of interest to the province of Quebec. It says:
The increase in the sales tax will automatically increase the provincial sales tax, since the latter is based on the price of the merchandise including the federal sales tax.
The Ottawa Citizen, in an editorial entitled "It could have been worse" says:
The real shocker of the 1951 budget is the increase in the general sales tax to 10 per cent.
The Montreal Star, speaking of the general sales tax, said:
It will inevitably bring in its train demands for higher wages.
The Toronto Star adds:
It is on the whole a good budget marred only by the sales tax increase.
Throughout the press there was a remarkable unanimity against this increase of 25 per cent in the general sales tax. The quotations which I have given are typical.
To sum up, there is a wide belief that the general sales tax will be of little use as a reducer of consumption, but conversely will have the effeot of increasing the cost of living. To a large extent the same will be true of other excise taxes.
Let us face the situation. This budget, which is purporting to cure inflation, will cause as its inescapable first result a substantial increase in the cost of living. One inevitable result, as the Montreal Star points out, will be forced on many of those in the community; the well organized will try to seek wage increases, and of course wage increases, unless accompanied by increased production, -can have only one effeot-the deadly spiral.
There is just one other aspect that I wish to refer to briefly, and that is an indication of a tendency on the part of business to take advantage of this situation, which I hope is not -typical. The hon. member for Lake Centre (Mr. Diefenbaker) referred very forcibly and cogently to this the other day; but the things that I wish to refer to are
16, 1951
The Budget-Mr. J. M. Macdonnell but rather trivial instances, and yet they may be-I hope they are not-straws showing the way the wind is blowing. I understand that 'he tax on cigarettes was raised three cents, but that the price was shoved up four cents; conversely, I understand that the taxes on chocolates were reduced two cents a bar, but the price came down only one cent a bar.* As I said a moment ago, I hope that that is not typical. I hope that the business community-as I am sure many of them have-are showing a sense of responsibility very different from that.
Considering this situation, and the inevitable result in new taxes, I wish to examine the budget carefully from the point of view of the money the government is taking from us. A correspondent of the Montreal Gazette on Friday last sent the following report:
"The federal government will tax more dollars from Canadians per capita than in the wartime peak. In the 1943-44 peak, Ottawa took 207-17 per capita in all tax forms. Last year the comparable figure was 2C0-86. But for 1951-52 with defence costs mounting, per capita tax will be 242-97. The reason it won't be noticed is that national income figures are much higher now and the government's cut of the melon, while higher in dollar and cents, is lower proportionately. In the peak war year, the federal authorities took 26-9 of the national income. In the new fiscal year they will confiscate 21-5 per cent."
It is interesting to look back to 1939 and find that the comparable figure then was 38-76. It seems like another world.
As we look back over the budget, particularly during the years that the present minister has been Minister of Finance, we are struck with one remarkable fact. Each year there has been a tremendous increase of revenue over the estimates. Sometimes the difference seems almost fantastic, and last year was no exception. In the spring of 1950 the minister estimated, if I remember correctly, a surplus of $20 million. What happened? In four months it was up to $253 million, about twelve times the estimate. Last September he had another go at it. After the new taxes and appropriations, the estimate was $15 million. Well, the result made that estimate look silly. The actual result was $203 million. I should point out that this $203 million was after introducing two charges which I very much suspect were not taken into account in September when the calculation was made. I refer to the $65 million paid to the western farmers and the $75 million adjustment of the civil service superannuation fund, doubtless a necessary adjustment; although, incidentally, I might say that we have got no adequate explanation yet as to why it was so long in coming to light and being dealt with. Therefore I say it would be far fairer to compare the $15 million estimate of last September, not with
*(See also page 2139.)

The Budget-Mr. J. M. Macdonnell $203 million, but with $343 million; in other words, something like 22 times, a good arithmetician tells me.
Of course, we remember the budgets before 1949, in those days when we had cyclical budgeting, the cycle of course not being a financial cycle, but a political cycle. We remember that the minister before 1949 held back plenty of money so that in 1949 we could have the sunshine budget in which, t believe, there was tax reduction to the Bxtent of about $323 million.
But those times are gone. However lenient we were then, I think the time for that has gone past. And I begin to wonder if these extraordinary increases are pure coincidence. I am generous enough to believe that somehow or other the Department of Finance can estimate better than that. Indeed, I wonder if it is just becoming a habit. I suppose ministers of finance must love surpluses. Indeed, the other evening when the Minister of Finance announced the surplus and spoke about the buoyant revenues-caused, of course, largely by disastrous increases in prices-the thought crossed my mind: Is it possible that the Minister of Finance does not detest high prices as much as the rest of us do?
However that may be, when the minister announces his windfalls I notice there are never any apologies. He always sounds rather proud, although what he is really telling us is that he has picked our pockets to the tune of several hundreds of millions of dollars. And it is not all his fault, perhaps, because we poor taxpayers have been so foolish- that we have almost allowed ourselves to be wheedled into a feeling of satisfaction over what is nothing short of a great failure on the part of the minister. What we should do is criticize him severely for having taken more money than he needed. I remind myself of what that great British Chancellor of the Exchequer, Philip Snowden, is reported to have said: If a chancellor of the exchequer has a half crown at the end of the year more than he needed, he is guilty of taking money under false pretences.


Douglas Charles Abbott: Even if he had a heavy debt?


James MacKerras Macdonnell: I am coming to that. Let us just consider what surpluses are like, unless they are according to plan, and are earmarked for debt reduction, so that we have got something to which we can hold the minister. We have never had anything we could hold him to. Moreover our surpluses have never been from spending less but they have always been from taking more.
Of course it is obvious that the effect on the spending departments must be bad when there are surpluses. Can anyone imagine a
[Mr. Macdonnell (Greenwood) .1


Mr. M. J. Coldwell (Rosetown-Biggar):: Mr. Speaker, in spite of what I may say a little later about the budget, I wish to join with the hon. member for Greenwood (Mr. Macdonnell) who, shortly after the budget was delivered, complimented the Minister of Finance (Mr. Abbott) upon his manner of delivery, and his placement of the records of the financial operations of the government before the country. I think the minister in the budget he has brought down has placed before the house a clear exposition of the government's view respecting the financial situation in which the country finds itself at the present time.
The Budget-Mr. Coldwell
I join however with the hon. member for Greenwood in criticizing the department for not having estimated the surpluses more accurately than they have been estimated from year to year. There may of course be reasons why this has happened, but nonetheless I think we should have greater accuracy than we have had during the last number of years.
I listened with great interest to the hon. member for Greenwood (Mr. Macdonnell).
I agree with much of the criticism which he levelled at the budget, and at the government whose budget it is. I shall perhaps repeat some of that criticism but in a different manner.
We do indeed live in very interesting and challenging times. I know that people sometimes wonder how we are going to get through the period in which we are living, but I think one is privileged to live in a period like this when there are so many challenges to society and when we are in the midst of such great economic and social changes.
In his budget the minister stated that there were two great issues which face the world today. First, there is the achievement of an enduring and expanding peace, and then there is the other problem of inflation. In our opinion the first is primarily a question of how best to achieve world understanding and co-operation through the United Nations. We believe that the second problem can be dealt with primarily as a domestic problem. I do not agree that we have to rely on conditions in the United States or have to be wholly governed by what happens within the borders of our great neighbour. Of course we cannot be entirely uninfluenced by what takes place there and indeed across the world.
Regarding the problem of peace, we realize that all we can do, and indeed all we must do is to use our influence and power for the peaceful settlement of disputes among nations. We are of necessity forced to accept the cooperative decisions arrived at after consultation and negotiation with other members of the United Nations. In other words, whether we like it or not we are not wholly and entirely sovereign in the realm of international affairs.
On the other hand, while our domestic economy, as I have just said, cannot remain uninfluenced by world economic trends and tendencies, there is much that we can do within our own borders to protect our people from the devastating results of such runaway inflation as we are experiencing at the present time. The government has not done anything, nor does the budget do anything
2054	HOUSE OF
The Budget-Mr. Coldwell effective to relieve the Canadian people from the evil effects of rising prices and uncontrolled inflation.
Prices have risen in a spectacular manner over the last six months, that is, since the minister introduced his interim budget last September. At that time we were told that some of the objectives of that budget were to minimize the inflation that was then quite in evidence and which has since gone much further. Indeed the last increase recorded by the dominion bureau of statistics was the highest in points in Canadian history. The index now stands at an all-time high of 179-7, as the hon. member for Greenwood remarked,
Of course the basic cause of inflation is excessive money, credit and purchasing power in relation to the goods and services available for sale or purchase. Another cause is that business, wholesale and retail, makes demands for factory goods and raw materials in anticipation of the development of shortages, because it believes goods will be in short supply. The result is that prices, particularly consumer prices, are pushed up unduly. We can add to this the belief, encouraged by the government, that price controls may be introduced and the determination that when they come some business will be, and I quote the words of the Minister of Trade and Commerce (Mr. Howe), "all set" and ready with high and profitable prices.
So far the inflation that we are experiencing has been largely psychological. Prices have been rising in anticipation of serious shortages and still higher prices. The vast expenditures for defence preparedness have not indicated their full effect. Defence expenditures are still largely in the first or preparatory stage. Only when defence industries are working to their fullest extent will the full effect of defence demands for basic materials, factory space, machines and labour be felt. If there is in addition demand for manpower from the armed forces as the result of more intensive recruiting, the consequent labour shortages and inflationary pressures must of necessity become intensified.
Thus it is that we of the C.C.F. are renewing today our insistent demands for a comprehensive national economic plan and the immediate institution of price controls and subsidies. Failing such a policy the relatively lower farm incomes along with increasing cost of production and a decline in purchasing power of wages will cause discontent on the farm and bring about renewed wage demands in the industrial areas. I say to the minister that these could upset both our defence efforts and all his budgetary forecasts. That this may happen 

has been stated by some of the leading men in both the farm organizations and the labour unions within the last couple of weeks. Yet neither in the budget nor in any of the government's pronouncements during this session can one find any realistic approach to these problems.
On the other hand, some of the proposals in the budget will increase further the already oppressive high cost of living. This is particularly true of the twenty-five per cent increase in the general sales tax. It is all very well for the government to argue, as the minister did the other night, that the sales tax applies only to one-quarter or one-third of the expenditures of families in the lower or middle income groups, but these are the groups that include pensioners of all types, persons living on annuities, savings and fixed incomes; these are the people who can least afford this substantial increase in the sales tax.
The hon. member for Hamilton West (Mrs. Fairclough) is in her seat this afternoon. One week ago I quoted from a survey which had been made in Hamilton and which indicated the hardship and malnutrition faced by old age pensioners in that city in this province. Whatever way we consider it, the sales tax is fundamentally an evil tax and most oppressive. It is made more oppressive because it is collected at the manufacturer's level and thus is pyramided substantially before it reaches the consumer.
To illustrate what I mean, let us take an article subject to tax which the manufacturer prices at $10. To this he adds the sales tax of $1. Therefore the wholesaler who buys from the manufacturer bases his profit "of 20 per cent, let us say, not on $10 but on $11, and the price he charges to the retailer becomes $13.20 instead of $12. The retailer now adds his mark-up of 33J per cent, let us say, so that the consumer pays $17.60 for the article instead of $15. By the time the 10 per cent tax has been paid by the consumer it has risen, in the instance I have just given, to about 12-7 per cent, nearly 13 per cent. If there are intervening mark-ups or the markups are larger, as they usually are-


Mr. Browne (St. John's West):: Where did you get the figure of $15? It is $16, is it not?


Major James William Coldwell: Yes, between $15 and $16 is right. I said $15 did I?


William Joseph Browne: Yes.


Major James William Coldwell: -on many classes of goods, the tax is correspondingly increased, and its effect on the cost of living is correspondingly greater. We object, and always have objected, to this tax on principle, but since it is going to be imposed anyway we urge

the house to provide that the ultimate consumer shall pay only the tax on the first or manufacturer's price. In other words, we urge the house to forbid any other person to add to it or to make any profit on the sales tax paid at the manufacturer's level.
Of course there can be little criticism in these times of taxes on luxury goods, but a tax of 25 per cent on some types of electrical appliances, and even in many instances on lower priced automobiles, is excessive. While some automobiles are luxuries, because of the way in which our cities have spread out and the manner in which hundreds of salary and wage earners, business and professional people, have to get to their work every day by automobile, an automobile is a necessity to them. Be that as it may, a most objectionable feature of the tax proposals included in the budget is the new levy of 15 per cent on mechanically operated domestic refrigerators, washing machines, and all domestic cooking stoves except those designed for the burning of coal and wood only.


Mr. Low:: Scandalous.


Major James William Coldwell: As the hon. member for Peace River (Mr. Low) says, that is a scandalous proposal. It means that all kinds of electric, gas and oil stoves will be subject to the tax. Today oil, gas and electric cooking stoves are of universal benefit as laboursaving devices when domestic help in both rural and urban areas is almost impossible to obtain. Modern suites, whether in large cities or in small towns, and many new homes are not properly equipped with chimneys for the emission of smoke from coal or wood burning stoves. I wonder what percentage of the houses that have been built in this city over the last number of years have chimneys so situated that the pipes of a coal or wood stove could be connected to them. I know a number of homes where it is absolutely' impossible unless a new chimney is built from the kitchen to emit the smoke.
When we consider the higher down payments required on newly constructed homes, increased mortgage interest rates, the excessively high cost of furniture, the added burden of a 25 per cent increase in the sales tax on some articles of household use, and now this new tax on certain types of stoves, washing machines and refrigerators, those establishing new homes are given a very severe knock indeed by the minister's budget. In my opinion the minister certainly might have found other luxuries that could have stood further taxation before imposing these onerous taxes on such modern necessities as those mentioned in the budget. I think
The Budget-Mr. Coldwell everyone expected increased taxes on alcoholic beverages, and, in spite of the minister's explanation as to why he did not meet this expectation, I am of the opinion that the money to be raised through taxes on modern household equipment should have been obtained by increased levies on users of alcoholic beverages, and indeed a wide range of other luxuries.
Let me say that it is not only the government's tax which increases prices but also the advantage taken by some business interests to increase their prices and profits on the basis of taxes, which in turn increases the burden placed upon society. The hon. member for Greenwood (Mr. Macdonnell) gave an example a few minutes ago? the increase of 3 cents in tax on 20 cigarettes which immediately became 4 cents to the actual consumer. Mind you, I am not objecting to high taxes on cigarettes and tobacco. After all, they are not necessities of life although many consider that they contribute to a pleasant way of living, if I may put it that way. On behalf of the C.C.F. party I wish to protest strongly against the new tax on cooking stoves other than those designed to use coal and wood exclusively, as well as on washing machines and refrigerators, and of course the 25 per cent increase in the general sales tax. It follows therefore that the amendment moved by the hon. member for Greenwood is in line with our thinking.
There is one further word I should like to say in connection with all these objectionable taxes. They hit hardest those who can least bear the blow. It seems to us that as an alternative certain types of household goods and articles of clothing manufactured according to standard utility specifications should be classified as utility goods and be exempt from both sales and excise taxes. Under the circumstances I think that is a constructive suggestion that the minister might well consider. With an increase of 25 per cent in the sales tax and a new excise tax on certain types of stove, as well as the other increased excise taxes, I should think the proposed amendment to the constitution to allow the provinces to collect a provincial sales or turnover tax will be nullified by the budget. I cannot see how the provinces can impose a further sales or turnover tax. Unfortunately the provinces have few alternative methods of taxation. The dominion government has very largely occupied the field of direct taxation and, as we see by the budget, is occupying it to an ever-increasing extent. Therefore what is happening is that the provinces have restricted fields of taxation. I think that means that federal grants to the provinces for specific purposes such as education and
2056	HOUSE OF
The Budget-Mr. Coldwell health are now more essential than ever. Indeed the whole cost of social security, including a national health plan about which I hope to say something more in a few moments, must be borne by the federal authority. Most of the provinces cannot bear an added burden.
To some extent these taxes are defended on the ground that they will discourage buying and hence relieve the pressure on scarce commodities like steel, in that way acting as a deterrent to further inflation. Well, of course this is the government's purpose in its policy of restricting bank credit and instalment buying, but I can tell the minister that the ^effect of this credit policy is being defeated to some extent by the activities of the small loan and finance companies. They still advertise widely that they have plenty of money available to lend to borrowers who are willing to pay the rate this house made legal several years ago, 18 per cent. Their balance sheets, their advertising and their busy offices indicate the extent to which purchasers of household goods as well as automobiles are turning to them to get enough money to provide for the cash payment, and thus escape the barriers placed against instalment buying or the making of small loans from our banking institutions.


Douglas Charles Abbott: That is a breach of the provisions of the act, of course.


Major James William Coldwell: It is easy to escape that, though. They borrow money and as far as I know there is no check on what they borrow it for except what the person says. I hope the Minister of National Revenue (Mr. McCann) intends to investigate and inspect this kind of business pretty thoroughly. It seems to us that apart from the usurious rates of interest permitted by our own legislation, which we as a party strenuously opposed when the legislation was before the house several years ago, the government should place definite proposals before the house to deal with a situation of that kind. If we are to forbid the banks to expand credit, which they provide at relatively reasonable rates in normal times, certainly we should see to it that loan sharks are prevented from lending money at unreasonable and usurious rates of interest.
The minister urged people to save, but I find and I fear that the disposition is to spend. That disposition is becoming more prevalent, to spend and invest in durable goods that will have some value. This is encouraged by the steadily depreciating dollar. People who have saved in the past have seen their investments in life insurance, annuities, victory and other bonds steadily decline in value in terms


of goods and services. I might add that when the victory loan campaign was inaugurated during the war the hon. member for Melfort (Mr. Wright) pleaded with the government to do what it did subsequently in connection with the savings bonds, and say to the people who invested in those bonds that they would be guaranteed at least par value for the bonds they bought. As the hon. member for Greenwood (Mr. Macdonnell) said, today some of these war bonds are selling below par. Thus the incentive is to say, "Let us eat, drink and spend and enjoy what we can buy, because in a year or two our dollars may be worth far less than they are now."
Yet while incomes in terms of goods have steadily declined, profits have continued to soar. In its previous budgets since the war the government has failed to drain off excessive profits or tax the enormous capital gains which have accrued to Canadian industry. Individuals who have fixed incomes, who work for salaries or wages, or farmers who deliver their produce to public or co-operative agencies, are taxed to the full extent on their incomes because the department knows exactly what their incomes are. But there is a widespread belief-whether or not it is correct I am not prepared to say, though I have been told a number of times, and quite reliably-that some companies, corporations and business people are able to charge against their business operations expenses which wage earners, salaried people and farmers must pay. I am informed that sometimes personal cars, travel and even holiday expenses are charged as business expenses.


James Joseph McCann: But not allowed.


Major James William Coldwell: Not allowed if found. But I have an idea that the investigation is much more thorough in some parts of Canada than in others. I have always been puzzled as to why we should find farmers in one part of Canada paying millions of dollars in income tax and farmers in another part paying only $14,000 or $15,000 in all in a single year. It seems to me there must be a difference in the way the investigations are carried on. But to continue with what I was saying; Mr. John Doe of Blank and Blank decides he wants a trip to Montreal, or to New York, or to some other distant point. He has business connections there, it is true. He calls on a firm with which he has contacts to discuss something which might not really necessitate a trip at all. Unless there is very careful scrutiny he may be able to charge that to his business account.


James Joseph McCann: Why don't you deal with something real? You are putting up hypothetical cases.


Major James William Coldwell: I am dealing with something real.


James Joseph McCann: Then give us the names.


Major James William Coldwell: Income tax matters are all protected by secrecy. We do not know what the minister does in his department. He asks me to give him names. Let him give us the names of some of the taxpayers who have excessive profits and incomes, and we will give him the names for which he asks.


Mr. Lesage:: But you are the one making the charge.


Major James William Coldwell: I am not making charges.
I am drawing these matters and possible abuses to the attention of the minister and the government in order that a proper and thorough investigation may be made in all parts of Canada into accounts of this description. I am not saying this is done universally, but I am saying that I believe it is done in some instances; that there are tax evasion practices that are not open to farmers who deliver their produce to grain elevators or to wage and salary earners whose incomes are reported to the government and whose tax is deducted at the source. I am urging careful investigation.
Because of the criticisms we have made from time to time in the past of the general effect and advantage to some types of business of the depreciation write-offs, I was particularly interested in the minister's determination to prevent the writing off of certain types of capital investment out of the expected high profits of the next few years when corporate profits may be high and income taxes also high. This is in line with a criticism we made during the last war and subsequently of the government's taxation and depreciation policies. I was glad to have our arguments, at least in part, so strikingly confirmed by the Minister of Finance in his budget speech. Since his new deferred depreciation regulations are designed to prevent profits from going into new capital expansion, I suggest that he should go one step further and relieve the tax burden on the lower income groups by taxing these unusable accumulating profits on a steeply graduated scale.


Douglas Charles Abbott: They will be taxed at the rate [DOT]of 50 per cent and up.


Major James William Coldwell: I am glad the minister did not lower the income tax exemptions. With the soaring cost of living, they are already too low. A good case can be made for raising the exemptions under present circumstances to at least $1,500 for single persons and $3,000 for married persons without children. Certainly it was better to impose
The Budget-Mr. Coldwell a surcharge on the tax to be paid; but, again, it should have been on a graduated scale instead of at a flat rate. The lower brackets should have been exempted and a graduated surcharge imposed in the middle and higher brackets. This would have been fairer and more just; and, under the circumstances, I think it is quite essential. However, apart from that, the idea of the surcharge on what is, if properly applied and if precautions are taken to prevent evasion, the most equitable form of taxation we have, namely, the income tax, is to be commended.
As for corporation taxes, the minister has been much more tender with them than with taxes on the individual citizens of the country. The minister said that to increase corporation taxes to a point of yielding still larger revenues, which would do grave damage to the economy in the long run, would be unwise; but as I have already shown, the hidden and indirect taxes placed upon the Canadian people are, in our opinion, likely to do much more damage to the health and welfare of the Canadian families than additional graduated taxation on corporations could possibly do.
If we look at the figures presented in the minister's budget, table No. 7, we find that in 1939 corporation profits, before taxes, amounted to $618 million; in 1946 they had risen to $1,450 million; in 1949 there was a further jump to $1,898 million; and in 1950 the minister estimates that they will amount to $2,270 million, an increase indeed of 19-6 per cent over 1949. Even after taxes, corporation profits in 1950 will amount to $1,402 million, an increase of 19-7 per cent over the 1949 figure.
On Saturday the Montreal Gazette published its initial compilation of earnings for 1950 compared with 1949 for one hundred Canadian firms whose financial years all coincide closely with the calendar year. These one hundred companies showed a profit increase on the average of 27-4 per cent, compared with the net, after all charges, including taxes, for the same one hundred companies in 1949.
The outstanding increase, in both dollar volume and percentage of profit, is to be found in the pulp and paper -industry. Seventeen companies engaged in this industry showed an increase of 33-7 per cent compared with their 1949 totals. I say this indicates clearly that while wage earners, salaried people, farmers and people on superannuation and other forms of fixed income are being squeezed, Canadian corporations are enjoying unprecedented prosperity and profits. That is why we feel that if individual Canadians are called upon
2058	HOUSE OF
The Budget-Mr. Caldwell to endure the burdens imposed by our necessary defence preparations, corporations and companies should not be allowed to maintain very high and, in some instances, quite excessive profits.
The minister indeed is determined to protect them against the effect of the 20 per cent defence surcharge which he provides shall not operate so as to reduce the net income after the federal tax on any company to a point below 5 per cent on the capital involved.


Douglas Charles Abbott: The capital employed. I
thought my hon. friend said "involved".


Major James William Coldwell: The capital employed. This position is quite the reverse of that which was taken in 1939 when- this house passed a Defence Purchases Act, since repealed, providing that profits on defence contracts should not exceed 5 per cent. This indicates clearly the fundamental difference in the approach of the Liberal party now and of the C.C.F. now in regard to this problem. We believe that when our institutions are in danger and sacrifices are to be made, there should be some attempt to achieve at least some equality of sacrifice. Because of this, Mr. Speaker, I wish to move a subamendment, seconded by the hon. member for Vancouver East (Mr. Maclnnis), which is as follows:
That the amendment be amended by adding thereto the following words:
"This house further regrets the failure of the government to exempt from the proposed 20 per cent defence surtax the incomes of single persons up to $1,500 and the incomes of married persons up to $3,000."
The minister's budget obviously does not in any particular achieve the ends which I have outlined and which we should have in view.
During the last war Canadians were led to believe that as soon as the war was over a comprehensive social security system would be inaugurated. The Beveridge report had been placed before the British people and in Canada a somewhat similar report was made by Professor Marsh. Coincidentally, a parliamentary committee was established to recommend a national health insurance plan; indeed a bill was drafted, and prior to the 1945 general election the Canadian people were told that this measure would go into effect as soon as a dominion-provincial agreement had been reached on constitutional matters.
As a matter of fact, in the dominion-provincial conferences, this question and the problem of universal old age pensions were [Mr. Coldwell.1

not reached on the agenda and as yet no adequate attempt has been made to fulfil the expectations that were raised by the presentation of the Marsh report and the formulation of proposals for a national health plan. In mentioning this, I want to say that if we are to maintain nation-wide support for our struggle against the threat of totalitarian aggression, the Canadian people must be granted the social security measures which they were promised during the second world war; and what is true of our domestic situation is equally true in the realm of our participation in international affairs. We cannot defeat the threat of totalitarian communism or fascism, should it again raise its ugly head, by military might alone.
The budget indicates clearly the huge expenditures involved in our military plans; these are expenditures that we must make. Yet in contrast, Canada's contribution to the first year, for example, of the Colombo plan is a conditional $25 million. While we are, I believe, making a great effort in military preparedness, we are not assuming, either within our own country in the realm of social security or in regard to such plans as the Colombo plan, obligations comparable with those assumed, for example, in a much harder-pressed country, namely the United Kingdom; nor are we contributing as much per capita to the southeast Asia plan as is Australia.
I therefore say that in order to achieve our objective in maintaining freedom and democracy, we must place greater emphasis upon the economic aspeots of our own domestic situation, of such international organizations as the Atlantic alliance, and of the problem of southeast Asia.
While there are features of the budget that I could commend, such as the provision to allow union dues to be charged as a deduction, and the provision which will allow money spent on drugs, to a certain extent, to be used as a deduction for income tax purposes, yet, my time being limited and expired, I have made the criticisms of the budget which I felt we should make and which are in line with criticisms we have made in similar debates on many other occasions.


Solon Earl Low: Mr. Speaker, the Minister of Finance (Mr. Abbott) brought down his budget last week, and yet the Canadian people today are still faced with two most serious threats. I acknowledge the seriousness of the international dangers that beset us at this time, and I

want to assure the government now that we of the Social Credit group are most anxious that our country, Canada, shall take every step that is possible or required to do our full share in stemming the tide of communist aggression and in establishing peace, security and good will, and true liberty throughout the whole world.
The present budget ought to be viewed at least partly, as the minister said in his budget address, against the facts of the international background. But I would remind the Minister of Finance that the main consideration in providing for an adequate defence effort appears to be the wherewithal, or in other words, revenue.
Viewed solely from the angle of providing revenue, the budget appears to lack nothing. It does provide for enough
revenue to	enable	the	government	tocontinue a	fairly	high	level	of !	services and	at the	same	time	make	asubstantial	defence	effort.	But	in	my
opinion inflation presents at this moment the greatest threat to Canadian strength, to Canadian safety and to Canadian wellbeing. And because inflation is our greatest enemy at the moment, and since the defence effort seems to be adequately provided for, I am compelled, in my address today, to consider the budget more from the point of view of its effect on prices and the cost of living than from any other aspect.
I ask hon. members today, what good will it do us to gain all our objectives in the international field through the use of diplomacy, armed strength and economic aid to other countries, if in the process we destroy our own economy and with it our chances of demonstrating to the whole world the superiority of the individual enterprise economy and our free way of life?
In his speech on Tuesday last the Minister of Finance said, as reported at page 1798 of Hansard:
A third great asset we should take full note of is that here in Canada, unlike so many countries, our people are not split and divided by fundamental cleavages of opinion. My task this evening is made easier because I sense that there are no great issues of principle dividing us.
Well, I am thankful, as is the minister, that there is not in Canada a numerically strong part of our population who militantly champion the cause of communism, and who oppose our way of life. I believe almost all sections of our population agree that we must unite our efforts to resist aggression and the spread of communist imperialism; that we have an obligation to help backward and starving peoples in other lands to build up
The Budget-Mr. Low
their economy so that they can help themselves, and that peaceful relationships with all countries and people the world over ought to be cultivated by us. But we of this group, Mr. Speaker, claim-and we have the best of grounds on which to make the claim-that the Minister of Finance is obliged to administer a financial and economic policy that compels him to be a petty dictator, because it forces him to put a much higher value on statistical figures than upon human flesh and blood.
We do not agree in any respect with that policy. We Social Creditors declare that every policy adopted by any government ought to have as its sole reason for existence the good and welfare of individual human beings.
I have often said that I like the Minister of Finance. I think he is a fine fellow, with great ability and buoyancy of spirit which are certainly difficult to match anywhere. I think he could be the greatest Minister of Finance Canada has ever had, if this house would lay down for him a financial policy which recognizes that human welfare must be its first and foremost obligation, a policy made for men, that exalts individual human beings to a position above institutional arrogance and disregard. That is the aim, and that kind of policy the minister has not got upon which he could lavish his great administrative abilities and his fine attainments.
The present budget is full of evidence of the truth of what I have just said; and as long as he has not got such a policy as I have suggested there will continue to be a decided fundamental issue dividing him and his colleagues from me and mine throughout this great country. I assure him, though, that that difference will not prevent us from giving the fullest co-operation to the government in all things designed to protect our country, our economy, our people and their welfare; but we must continue to struggle for the introduction into Canada of the Social Credit way of life which is nothing more or less than the principles of Christianity applied to finance, economics and the government, as well as to personal liberty.
Let me say to the Minister of Finance that he will never solve the threatening inflation danger and its allied shrinking of the purchasing power of the Canadian dollar until he does adopt a financial policy which regards the welfare of human beings as a paramount consideration. We place ourselves squarely on the side of the masses of the ordinary Canadians in their struggle for freedom from

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oppression of every kind, and the present financial policy administered by my good friend, the Minister of Finance, is an oppressive policy.
There are some good things that one could say about the budget. I liked the air of optimism that the minister had when he presented it. I relished also the faith that he expressed in our country and in its ability to come quite safely through the storms that appear ahead. I believe that the minister was wise in adding the simple surcharge to the personal and corporate income taxes, rather than disturbing the present rates and exemptions. When the time does come that he will not need so much revenue as he does now-and I hope it will come soon-it will certainly be easy, and not at all disturbing, to drop this surcharge. Furthermore in this provision-this is one at least-the minister did recognize the very heavy struggle that the people in the lower income groups are having to make ends meet under the impact erf the highest living cost in our history. If he had not spoiled it later on in his budget we would have much more hope for the future, and he would have had much more reason for rejoicing.
I think the minister's provision of something of a deterrent to private capital investment for the next five years was good. It probably will not deter very much investment, but it is good as far as it goes, and it certainly is based on the right principle so far as I am concerned.
The minister was fair also, and he showed some sensitiveness to public opinion, when he provided in his budget for changes in tariff that are designed to give free entry into Canada to certain items of farm equipment, such as grain and hay driers, individual sprinkler irrigation systems- and certain fishing equipment, and some items of dairy equipment. The farmers and fishermen of Canada will certainly be thankful for these changes because they will in some measure at least reduce the cost of production., and in so far as they do that they will be an inducement to greater productive effort. I compliment the minister on those changes.
There is also in the minister's declaration the pay-as-you-go policy. He says that through the present difficult period he intends following that policy. Well, certainly his financial arrangements this year indicate that at least during the next year he will follow it, and he will be able to. We support the idea of a pay-as-you-go policy now. But let us hope that the government does not make the same mistake that they made during
(Mr. Low.]
world war II when, after declaring a pay-as-you-go policy, they departed quite swiftly therefrom shortly after the start of the war and ran our national debt from $3,500 million up to $16 billion by the time the war was over. Not only that, but some very foolish things were done in the name of bond selling which did help to establish quite firmly in the Canadian economy the roots of our present serious inflation.
I think the minister delivered a timely warning to the public at large which included consumers, producers of every kind, farmers, merchants, businessmen and labour when he asked for restraint and good sense in all economic matters, and appealed to all producers to increase their efficiency and their output.	.
It is plainly evident that if we are going to whip inflation and save and stabilize our economy we have all got to produce more, which means, of course, as the minister said, harder work and perhaps longer hours, and surely a definite increase in our efficiency in our productive effort. Unless we produce more, and unless at the same time we reduce costs, we cannot hope to bring prices down to within manageable proportions. The minister could very well, if time had permitted, have appealed to organized and unorganized labour of all kinds to concentrate their attention on increasing their purchasing power, rather than merely going through hell and high water to get increases in their dollar income. When they do take that line of action their efficiency is bound to increase, and their efforts will be really worth while.
On the part of employers of labour I think it is absolutely essential that they go all out in an effort to cultivate better employer-worker relations by every means at their disposal. If they do not, I cannot see how there can be higher production, and therefore lower consumer prices. I do not know of any better way of improving employer-worker relationships than through the introduction of incentive systems, such as profit-sharing.
A number of most interesting experiments along this line have been conducted in various parts of America over the last twenty or twenty-five years. Unfortunately the experiments have been mainly carried on by small companies, some of which have in those years grown to be pretty large and powerful as a result of the incentive system. The bigger corporations in this country would do well to concentrate on some such sort of improved relations between the management and those who work for them. A fine example for them to follow, in my judgment,
APRIL ie. 1951
would be that of the Lincoln Electric Company of the United States, which has been the leader in this sort of labour-management relations for some time. No strikes have disrupted their progress, and right from the time that the system was introduced the cost of producing a unit of goods has shown a steady decline.
After saying these good things about the budget-and I have deliberately taken those few moments to say some good things about it, in fairness to the minister and to the government-I must turn now to some criticisms. I could go on and say other good things, but I have not the time.


Douglas Charles Abbott: Too many to cover them all.


Solon Earl Low: As I have said, the budget does appear to provide the government with sufficient revenue to make it possible for them to conduct a strong defence effort, and to continue to give a fair level of services. The dollars that will be brought in by the various methods of taxation, of course, will be emaciated ones that will have a hard time to buy fifty cents' worth. But there seems to be sufficient of those emaciated ones to fulfil the purposes the minister has in mind.
But the budget will do nothing to put value back into the Canadian dollar. Let me repeat that the budget will do nothing whatever to put value back into the Canadian dollar, and to bring down the cost of living. I see in the budget inflationary forces, and I cannot help declaring that the budget itself is an inflationary budget-just as the hon. member from Greenwood (Mr. Macdonnell) and the leader of the C.C.F. (Mr. Coldwell) have said before me.
I quite agree with those gentlemen when they say it is an inflationary budget. Here are some reasons-and I believe any man should be ready to give reasons for the faith that is in him. In the first place, the government proposes to spend essentially all the revenues that it takes in this year. That means that there is not going to be any surplus for the purpose of removing purchasing power, just so that it cannot be spent.
I am not criticizing that; I am simply making a statement of fact. This alone indicates that there will be $3,586 million of government spending out in competition with the many billions of individual spending during the coming year. There is no provision whatever in the budget to prevent further inflation of prices under these circumstances-not the slightest. In the second place, while it is quite true that the government
The Budget-Mr. Low
has proposed certain tax increases on which it means to rely almost exclusively just now for controlling inflation, I am absolutely sure within my own mind that the taxation they propose will be no curb on inflation; and I am perfectly sure that under present circumstances the minister will soon discover that that is so.
Dr. Carl Shoup and two of his colleagues from Columbia university published in 1943 the results of a careful research project which they called "Taxing to Prevent Inflation". I secured a copy of that book and read it because I was intrigued with the idea of taxation to curb inflation. Here is what Dr. Carl Shoup and his colleagues had to say, on the very first page of the book:
Prices may be about to rise because production and transportation have become more difficult, so that each unit of finished production requires more man-hours of effort than ever before. Although time-rates of wages remain unaltered, there is a rise in labour costs per unit, and possibly in other unit costs also. Under these circumstances it is unlikely that taxation can keep prices down; taking away purchasing power from consumers by taxation will not alter the fact that costs per unit of finished output will have risen. Prices must rise with costs unless the government provides subsidies.
And then comes the part which applies especially to Canadian conditions today. It is almost a recital of the conditions under which we live. Dr. Shoup continues:
Similarly, if costs rise because the agents of production arbitrarily raise the price of their services by concerted action, taxation is no cure. The business world in general might refuse contracts unless promised a higher rate of money profits; labour might insist on higher rates of money wages. Whether the result were an increased money flaw supported by an expansible credit system, or a decreased volume of production, or both, would depend in part on the tax policy that was adopted; but the rise in prices would be present in any case, in the absence of subsidies combined with rationing.
Now, one can easily see in Canada the exact situation described in these quotations, particularly the second part. Under the cir-. cumstances, to think that the taxation proposed by the Minister of Finance, unaccompanied by subsidies or other action, would bring down prices or take care of the inflationary situation is pure foolhardiness.


Mr. Blackmore:: At least as bad as that.


Solon Earl Low: What does inflation mean? Inflation means simply a rise in prices; so that anything that increases prices is inflationary, whether on an individual basis or considered over the whole of the economy. James F. Lincoln, president of the Lincoln Electric
2062	HOUSE OF
The Budget-Mr. Low
Company, about which I spoke a few minutes ago, in a description of his Lincoln incentive system, says this:
Taxes increase the cost of everything we buy. We could call them all sales taxes for they are all charged against the cost of production and show up in increased price of everything the ultimate consumer buys. Only the consumer pays taxes in the final analysis.
The only difference in the effect of the incidence of various taxes is the amount of price increase that results. Some taxes pyramid prices and others do not. I was surprised, and I am sure that people from one end of the country to the other were shocked, when the minister announced a 25 per cent increase in the sales tax. It is perfectly clear from the speech of the minister that the government is using this tax for revenue purposes exclusively, and certainly not for its anti-inflationary provisions. I am thoroughly in agreement with those who say that there are other sources from which the needed revenues could have been obtained without in any way causing an increase in general prices. As the hon. member for Rosetown-Biggar said, the minister could have placed an additional levy on liquor and beer to raise the whole amount. That is one place where he could have got more money. By increasing the sales tax from eight per cent to ten per cent the minister has increased the hardship faced by many Canadian people and has definitely increased prices or the inflationary condition in this country.
Let us take a look at what some experts have to say about the sales tax. I have heard it argued right in this house that the sales tax does not pyramid prices and does not necessarily cause inflation. Dr. Carl Shoup, and his colleagues, Milton Friedman and Ruth P. Mack of Columbia University, in a study called, "Taxing to Prevent Inflation", published in 1943, expressed this view on page 89:
Both (manufacturers' and wholesale sales) taxes may result in some pyramiding; that is, the retailer and, under the manufacturers' tax, the wholesaler also, may apply their customary percentage markups to a cost price that includes the sales tax, thus obtaining a profit on the tax.
I remark right here that the experience in Canada is that in periods when there are moderate corporation income tax rates and no excess profits taxes the sales tax at the manufacturer's level almost always results in pyramiding prices, which simply means that the consumer is forced to pay much more in additional prices than the dollar the government hopes to obtain from the tax.
Dr. Shoup conducted a survey of the general sales tax in France some years ago,


and on page 323 of his report called "The Sales Tax in France" he says:
Many French commentators, more especially those not connected with business firms, believe that the buyer (wholesale or retail) raises his prices by more than the tax, the theory being that the business man sets his prices on the basis that his profits must equal a certain percentage of his expenses; and as the tax is counted amongst his expenses, the base on which the profit percentage is considered, is swelled. Hence, the logical conclusion, frankly stated, is that the imposition of the tax increases the businessman's profits.
Nothing could be more clear than that statement by experts who have spent a long time in a most careful and comprehensive study of the effects of the incidence of the general sales tax. Back in 1923 the Illinois and Indiana bankers association sent their tax counsellor, Mr. H. R. Archibald Harris, C.P.A., to investigate the Canadian sales tax. It is something when you get a bankers association investigating the effect of the incidence of the sales tax. They must have been quite concerned about the effect of it upon the ordinary people. At the time it was being proposed to impose a sales tax in both Illinois and Indiana. At page 35 of his report entitled, "The Sales Tax in Canada," Mr. Harris says this:
The so-called painlessness of the Canadian tax is costing the taxpayer about 40 per cent more in taxes than would be necessary if the tax were simply added on to the price which the consumer finally pays, instead of being put on the sales price of the manufacturer.
There you have a concise statement of the situation, and without question it is a true statement. That is one reason- why I have always been opposed to a sales tax at the manufacturer's level. It definitely tends to pyramid prices and create hardship for people in the lower income groups. As an illustration of what the imposition of sales tax will do we have the announcement today by Imperial Oil Limited of an increase in the prices of gasoline, diesel oil, fuel oil and other oils, purely as a result of the imposition of the increased sales tax last week. That will increase prices and the cost of living to the Canadian people, as well -as increase the cost of production to the Canadian farmer and those who use quantities of diesel and fuel oils.
When the minister asks himself and the Canadian people whether a threatened rise in price can be averted by additional taxation, let him re-examine the expert opinions I have just quoted. There is no doubt in my mind that under present circumstances the answer would be a resounding "No". I am definitely opposed to an increase in the sales tax at this time because it is inflationary and

will cause hardship. All my colleagues are in thorough agreement with that. I am further opposed to it because it will impose hardships upon already over-burdened people in the lower income groups of our population and because it denies our people the advantages they should be getting from technological developments throughout the world.
As we go along we are inventing new methods of manufacturing, better materials, new types of machinery that can make things faster and cheaper than ever before in history, and yet the people of the country cannot have the advantages of this type of progress because the government insists on coming in and putting on such dreadful things as a pyramiding sales tax. Prices are going up and up, and continue to do so. They will continue to do so as long as we persist in following the present outmoded and foolish practices in our financial operations.
I am also opposed to what appears to be an inclination on the part of this government to convert as many direct taxes as they can into indirect and hidden taxes. That is not a sound thing to do. If the merchants of this country were to show the price of every article they sell to the public in two parts, the actual cost less tax on one side and the total taxes applying to the article in separate figures on the other side, which when added together would be the cost to the public, the people of this country would soon change the policy of the Minister of Finance. It might be a right good thing to have done.
There are very few up-to-date and comprehensive studies available to Canadians to inform them about the economic effects of the incidence of our various taxes. I have made quite a search in all the libraries I could contact and I have found that such studies are not common and are few in number. I think the government owes it to the people and to themselves to provide some money for the making of a thorough survey by competent students of our sales tax, income tax both corporate and personal, excise taxes and tariffs. The people of Canada have every right to this information, and certainly the legislators of Canada sorely need it if they are to do a good job of governing our country.
The special excise tax of 15 per cent on refrigerators, electric stoves, washing machines and certain other household electrical appliances is a discriminatory tax. Not only does it impose a higher cost of living on many people but it is also a discriminatory tax. It singles out especially young people who are just now trying to set up housekeeping. Goodness knows there
The Budget-Mr. Low
have been enough impediments put in their way without having this discriminatory tax put upon them. What with sky-high prices for ordinary essentials, scarcity of building materials, lack of housing, high rents, and scores of other things, my gracious, anybody with half an eye can see that these young people should not be burdened any further. Anyway, I ask the minister: Why single out the electric stove, power washer and refrigerator and call them luxuries in this day when in many places, as was so well pointed out by the hon. member for Rosetown-Biggar (Mr. Coldwell), there is no other choice? That is true of many places in Canada. These young people will be forced to pay $16 million more this year on these few items alone to get started in housekeeping than they would have had to pay last year. Does anyone say that the budget is not inflationary to them? Of course it is. As the hon. member for Macleod (Mr. Hansell) says to me -this is the Liberal wedding present to our young Canadians.
Furthermore, can anybody justify a tax that discriminates against certain sections of the Canadian population? In my judgment no discriminatory tax can be justified in this or any other country. Here is one bit of revenue-it is only $16 million-that the government really did not need, so why did the minister not find some fairer way of limiting the use of scarce steel and other metals than this unfair way? He has budgeted for a surplus of $30 million.
I turn for a moment, Mr. Speaker, to the cost of living. Since I spoke in the debate on the cost of living early last week there have been fairly strong indications that organized labour, civil servants and others are beginning a drive for further wage increases to offset the recent great increases in the cost of living. The index for March shows a rise of 4-5 points over the index for February. As you will recall, the index for February showed an unprecedented rise over the index for January. Indications are now that the index may continue to rise further in the months ahead of us. Certainly the situation will not be improved if further wage increases are sought, no matter whether or not they are given. If wage increases are granted when they are sought then of course prices will soar again and inflation will become much more dangerous. If they are sought and not granted, then employer-labour relations may become strained to the point where production will suffer a decline, and that in itself would be a dangerous thing because it would intensify the effects of inflation.

The Budget-Mr. Low
Labour cannot be blamed for trying to survive in this crazy world, but I must say again that labouring men throughout Canada would be far better off if, instead of going all out after higher dollar incomes, they would spend their energies and capabilities trying to increase the purchasing power of their present incomes.


John Horne Blackmore: By bringing down prices.


Solon Earl Low: By bringing down consumer prices. They and everybody else would benefit that way, and we might possibly as a result begin to get away from this dog eat dog competition that threatens to destroy us and our economy. Putting sense-or cents -back into the Canadian dollar so as to bring back its purchasing power is the most important economic effort that anyone could be engaged in today. We have simply got to solve this terrible cost of living problem one way or another or it is going to destroy us, and that is not a pleasant prospect. It is the most pressing problem of this age. Every bit of useful information about the cost of living and the declining purchasing power problem that we can possibly accumulate, organize and place before the public ought to be made available to the people.
I am applying much of my efforts to this very problem, and I invite all other hon.
members of the house to do likewise. On Monday, April 9, the hon. member for Rose-town-Biggar put on Hansard some very useful figures with respect to the cost of living. I was intrigued by them, and1 have studied them carefully. Since that time I have put them into short tabular form, and have extended them to show at a glance exactly how serious the decline has been in the actual purchasing power of personal incomes in Canada from 1946 to 1951. I compliment the hon. member for Rosetown-Biggar for digging out these figures. They are available to everyone. They are simply compiled from dominion bureau of statistics figures quoted by the Bank of Canada in its statistical summary of February, 1951. I should like permission to put this short table on the record because, as I say, it is essential in the interests of progress that the people of Canada have before them all the facts and figures they can gather with respect to what inflation does to them and to their incomes. May I have permission?


Mr. Speaker:: Has the hon. member
permission?


Some hon. Members:: Agreed.


Solon Earl Low: The table is as follows:
I Mr. Low. I


TABLE SHOWING SERIOUS DECLINE IN ACTUAL PURCHASING POWER OF PERSONAL INCOMES IN CANADA FROM 1946 TO 1951
[Stage Direction]
Years	Population	Cost of Living Index	Personal Income (Millions of Dollars)	Per Capita	Real Purchasing Power in Terms of Cost of Living Index (Millions of Dollars)	Per Capita	Confiscated Purchasing Power through Inflation of Cost of Living Index (Millions of Dollars)	Confiscated Purchasing Power through Inflation Per Capita$	$	$	$	$	$1946	12,307,000	123-6	9,671	786	7,824	636	1,847	1501947	12,582,000	135-5	10,342	822	7,632	607	2,710	2151948	12,883,000	155-0	11,842	919	7,640	593	4,202	3261949	13,549,000	160-8	12,674	935	7,882	582	4,792	3531950	13,845,000	166-5	13,320	962	8,010	578	5,310	3841951	13,870,000	179-7	13,327	961	7,416	535	5,911	426Total	71,176	5,385	46,404	3,531	24,772	1,854
Compiled from "Dominion Bureau of Statistics" figures quoted by "The Bank of Canada" in its statistical summary of February, 1951. Percentage decline-15-88% in five years.
[Stage Direction]
The Budget-Mr. Low
[Stage Direction]
The Budget-Mr. Low This little table shows the Canada-wide picture. Oftentimes we hear just such exchanges as took place in the house today about one part of the country finding itself under more duress than another part of the country with respect to inspections, collections, and so on of income tax. It is often wise to take the dominion-wide picture and to break it down in order to show what the facts are in each of the provinces. I have done that, Mr. Speaker. I have broken down the figures in the table I have just put on Hansard to show exactly what the decline in the real purchasing power of personal incomes has been in each of the provinces.
[Stage Direction]
I am not going to ask to put them all on Hansard because it would take too much space. I have broken down the figures for the whole dominion to show what the increase in the cost of living index has done to the real purchasing power of personal incomes in my own province of Alberta as an example, and I should, like to put it on record in this short tabular form in order to show what has happened in that province.
Mr. Speaker:: Has the hon. member permission?


Some hon. Members:: Agreed.


Solon Earl Low: The table is as follows:


ALBERTA PERSONAL INCOME IN DOLLARS AND IN REAL PURCHASING POWER FOR YEARS 1942-1949
[Stage Direction]
Years	Population	Cost of Living Index	Personal Income (Millions of Dollars)	Personal Income Per Capita	Real Purchasing Power in Terms of Cost of Living Index (Millions of Dollars)	Pur- chasing Power Per Capita	Confiscated Purchasing Power through Inflation of Cost of Living Index (Millions of Dollars)	Confiscated Purchasing Power through Inflation Per Capita$	$	$	$	S	$1942	776,000	1170	521	671	445	573	76	981943	792,000	118-4	485	612	410	518	75	941944	818,000	118-9	590	721	496	607	94	1141945	826,000	119-5	556	673	465	563	91	1101946	803,000	123-6	654	814	529	659	125	1551947	822,000	135-5	700	852	517	629	183	2231948	846,000	155-0	862	1,019	556	658	306	3611949	871,000	160-8	879	1,009	547	628	332	381Total	-	-	5,247	6,371	3,965	4,835	1,282	1,536Figures from "National Accounts, Income and Expenditure 1942-1949" issued October 5, 1950 by Dominion Bureau of Statistics.	,. . ,	,
Personal Incomes includes salaries, wages, labour income, agricultural income, incomes of unincorporated businesses owned by individuals, interest, dividends, and rents.
to
o
o
The Budget-Mr. Low
[Stage Direction]
The Budget-Mr. McCusker
Let me say here, Mr. Speaker, that the table I have just put on the record shows that, although the total personal money incomes of all the people of the province of Alberta increased from $521 million in 1942 to $879 million in 1949, and the per capita annual dollar incomes increased from $671 in 1942 to $1,009 in 1949, the real total purchasing power increased only from $445 million to $547 million. The per capita annual purchasing power rose only from $573 to $628. Just by a glance at these tables one can see what a terribly confiscatory effect the present inflationary situation has upon personal incomes, and it can be worked out in dollars and cents.
The present inflationary situation may be a world-wide condition, as the Minister of Finance says, but I can assure him it is no phenomenon. It is a serious indictment of the financial and economic policy being followed by this and other nations. Inflation, like unemployment, does not come about as a result of the appearance of some virusspreading spots on the sun. It does not just happen. Inflation comes about as the direct result of policies that are laid down by men, and it can be cured only by other and better policies laid down by men who are determined to give the human resources of this and other countries the opportunity for development and growth which is their divine right. It is to that end, it seems to me, that we ought to direct our attention. It is to that end of providing opportunities for the fullest possible measure of individual development and progress that the Social Credit organization across Canada has directed its attention and efforts.
I think I cannot close with any better words than these. Unless we get down to business and solve this serious question of the cost of living and the declining value of the Canadian dollar that problem will destroy our economy, and with that destruction of our economy will go the destruction of our chances for liberty in the years to come.
At six o'clock the house took recess.

AFTER RECESS

The house resumed at eight o'clock.
Mr. E. A. McCusker (Regina City):: Mr. Speaker, tonight I should like to direct the attention of the house to a serious problem which is affecting Saskatchewan and to offer a solution to it. I refer to its loss of population. First, I should like to give a little of the history of its settlement; second, economic and other reasons that have led

to the loss of population; and third, steps which should be taken to establish economic stability there so that we can retain and support our population.
About the turn of the century the settlement of the prairies started in real earnest. The tides of immigration from many nations flowed in, met and commingled. Racial traits, national antipathies and unknown tongues made slow the progress in welding these divergent people into a homogeneous community. But that amalgamation did take place, and today we have a united people in Saskatchewan.
In the great work of building up that country, many forces conspired to hasten this fusion taking place and none was more potent in influence than the opportunity given these people to work out their individual destinies under democratic institutions. Many of them for the first time experienced freedom there. These provinces were settled by young people from the maritimes, Quebec, Ontario, the United States, Great Britain, Ireland and many parts of Europe. They were the younger sons and daughters- the more venturesome-who sought opportunity in a new land. They brought from their countries little of worldly goods, but they brought a wealth of culture, ambition and determination. They quickly adapted themselves to the new life and to the hardships of pioneering, and built up that country. If you do not think that they have been assimilated and become good citizens, look at the honour rolls and read the names of those sons and daughters who served in two wars; look at the registration in the universities; look at the names of those taking part in the musical festivals. I am sure many of you were thrilled last night with the lovely voice of June Kowal-chuk, of Regina, who sang in Toronto on the program "Singing Stars of Tomorrow" and won the first award. Look at the names of our athletes. In every part of the country you see the people who came there taking part in our activities.
After the first war our soldiers returned and helped us to build up that country. They had not been trained mechanically and industry in the east did not attract as much as it does today. Then came the recession with its economic upsets. Through drought our production was greatly reduced. Our herds had to be destroyed. We had no industry. Unwise marketing policies lost us our markets. I refer to the famous phrase "blasting our way into the markets". Our people started to leave. During the second world war our men were given mechanical and technical training in the

armed forces. Those boys and girls not in the forces were attracted to eastern industry. They married and did not return. Upon their return from the war, our soldiers were absorbed in the industry of the east, for which they had been trained when they were in the army. In ten years we in Saskatchewan lost 98,000 people; that is, between the years 1936 and 1946. This was owing to unsatisfactory economic conditions caused by poor crops and lack of industrial employment due to lack of cheap hydroelectric power. Since 1946 we have regained 43,000 of our population; but once again manufacturing incidental to our defence preparations in the east is draining off our young and skilled people. The nature of our farming operations has changed and in this new mechanized age we employ fewer men. The disturbing feature of our agricultural situation today is that the farms are being operated by an older-age group who will leave no relatives on the land when the age of retirement is reached. What is the solution to this problem? The solution lies in irrigation and power development.
You will remember that in 1949, in the first session of this parliament, I spoke on the serious position that Regina and Moose Jaw found themselves in owing to lack of water. I explained the reason for this situation and outlined the measures which should be adopted to bring them relief. I am glad to say that my recommendations were accepted and that today the solution of that problem is in sight. With the irrigation and power development there will arise the important problem of soil conservation and water conservation.
You are aware that much of the poverty and desolation of the Mediterranean countries today is due to faulty soil and water conservation there in the past. As you come up the coast of the Mediterranean toward Tel Aviv you suddenly emerge from barren land and pass into a veritable paradise. This land has been reclaimed and put into productivity by irrigation. Today it is our duty to protect our land in Canada.
In southwestern Saskatchewan and in southeastern Alberta there is a large area which should have been retained for grazing; it was unwisely opened for settlement. This land cannot fully support the people now living upon it. The Prairie Farm Rehabilitation Act has helped considerably in solving this problem, but much remains to be done. As irrigated land becomes available, many of the people will be moved off this land to which I have referred, and the rest will be able to support themselves by being given a greater acreage to till and
The Budget-Mr. McCusker graze. Near Lethbridge there is one area where, owing to irrigation, the population has increased 250 per cent in twenty years; and Lethbridge today is one of the most prosperous communities in Canada.
Irrigation is no longer an experiment. It has been tried and found successful in Alberta and in some parts of Saskatchewan. The project in Alberta will eventually develop 1,750,000 acres and in Saskatchewan 750,000 acres. In addition, the Saskatchewan project will develop 400 million kilowatt hours of saleable electric energy per annum, sufficient hydroelectric energy to supply the present needs of the province.
The South Saskatchewan river development project has been under study and in the public eye for a number of years, and the time has now arrived when we should proceed with its construction. It is necessary for all concerned to give their earnest attention to the place of this project in the national economy of Canada, and to study the data collected on all phases of the project from which a decision can be reached. A report covering all phases of this project has been tabled. It has been compiled by experts.
Many public references are made on the failure of irrigation projects in the past. Private companies such as the Canadian Pacific Railway have pioneered irrigation over forty years and it is from these experiences and similar ones in the United States that many lessons have been learned. It is now recognized by most governments that the total capital costs of the project should not be properly chargeable to the land. Experience in Alberta shows that the farmer alone does not benefit from the investment. Transportation companies, manufacturers, processing companies, distributors and business generally enjoy in total far greater benefits than the farmer.
By arrangement between federal and provincial governments, it is usually accepted that the federal government should stand the cost of impounding the water and that the provincial government should stand the cost of its distribution. The provincial government has the opportunity of recovering part of its expenditures by charges for water. The federal government usually regains its capital investment through increased revenues. Over a period of thirty-five years in the United States the government has recovered its entire investment in irrigation.
The history of irrigation has made it possible to assess the value of any new project and before the construction is undertaken the following factors must be studied.

The Budget-Mr. McCusker
We must ascertain whether (1) the water supply is adequate. That has been well established, I think. The South Saskatchewan river, through its tributaries, collects the runoff water from a large part of the east slope of the Rockies. There is sufficient water there to supply to the United States its share, to irrigate all the land in Alberta and Saskatchewan that is available for irrigation and have sufficient left over to supply the water power to develop this 400 million kilowatt hours of electric energy that I previously mentioned. It would also act as a reservoir and feed down the Saskatchewan river enough water to increase the potential hydroelectric production at Fort a la Corne by a hundred million a year.
(2) We must ascertain whether the climate and soil are suitable to assure much higher productivity on irrigated land than on dry land; (3) whether the project is feasible from an engineering standpoint; (4) we must ascertain whether farm units are of a size for economical and efficient production; (5) whether the financial burden placed on the farmers is light enough to permit better land use and to promote enterprise; and (6) whether the markets are sufficient to encourage development.
The South Saskatchewan river project has been studied in the light of the above factors. It has had the benefit of the experience of other projects in Canada and the United States. There is no water conservation project in Canada that has been so fully studied. A complete set of reports has been tabled in the House of Commons. The facts have been analysed by the most competent technical and engineering experts in Canada. In addition, the best consultants have been employed in Canada and the United States. They include Major General H. B. Ferguson, retired United States army engineer, Washington, District of Columbia, consulting engineer; Dr. A. Casagrande, graduate school of engineering, Harvard1 University, Cambridge, Massachusetts, consultant on soil mechanics and foundation problems; Dr. J. A. Allan, consulting geologist, professor emeritus, university of Alberta, Edmonton, Alberta, consulting engineering geologist; and Dr. O. W. Israelsen, research professor of irrigation and drainage, Utah State Agricultural college, Logan, Utah, consulting engineer on irrigation and drainage problems.
In comparing the South Saskatchewan river project with Alberta and British Columbia projects, it must be remembered that the former is a multiple project of power and irrigation, whereas Alberta and British Columbia projects are mainly irrigation.

Therefore, it is necessary to consider the South Saskatchewan river project on its merits.
In the report which was tabled all phases of this project were dealt with: climate, soil, engineering feasibility, economics of irrigation, power, recreation and other benefits. I am not going to review them tonight. The report has been tabled in the house and is available for the study of anyone Who is interested.
The South Saskatchewan river project is in the heart of one of the driest parts of Saskatchewan. Its climate varies greatly and drought conditions occur periodically and cause tragic losses to the farmer, costly expenditures to governments, and the loss of purchasing power to business, both east and west. While these conditions occur periodically, yet this same area has produced hundreds of millions of dollars of wealth to Canada. This fact must not be forgotten. Therefore, it is in the interest of Canada to ameliorate the problems of drought and bring stability to agriculture. A reference to the situation in 1937 is a definite example: (a) Owing to drought it was necessary to ship into Saskatchewan over 500,000 tons of hay to maintain the livestock industry that year. This hay came from Ontario, Quebec and the United States and (b) shortage of grass and hay resulted in the forced marketing of over 480,000 head of cattle at ruinous prices, namely, one-half cent to one cent per pound. The whole livestock economy was upset. In addition, farmers lost their breeding herds and it has taken over fifteen years to build them up again.
With the development of the South Saskatchewan river project the drought problem would be greatly minimized and eventually we would have a permanent agriculture without the necessity of agricultural aid during drought periods.
The position can be emphasized further. In 1937, one crop district produced 600,000 bushels of grain, yet in 1942 the same crop district produced 92 million bushels of grain. Such a contrast is unbelievable. Yet this same area over a period of thirty-five years has produced an average of 40 million bushels per year. These facts in grain and livestock production point out the necessity of insurance against drought.
In order to develop this irrigation project, a dam must be built at Elbow on the South Saskatchewan river and a second one at the third meridian in the Qu'Appelle valley. The reservoirs thus created would extend 140 miles back in the Saskatchewan river and

thirty miles down the Qu'Appelle valley. The powerhouse and spillway would be in Coteau creek. The use of power thus made available for industrial development of primary products will provide a great impetus for a more balanced economy.
The total cost of $102 million does not mean that all this money will be spent in Saskatchewan. At least half of it will be spent in Montreal, Toronto, Winnipeg and Vancouver, where equipment and supplies are manufactured.
I want to review something of the employment that this project will give. In total there will be 26 million man-hours of on-site labour used during the period of construction. That means that in actual labour on the project it will provide employment for 1,500 men for a 200-day period per year for over 10 years. It is recognized that labour is required for defence construction now, and it may be said: defer the project construction until this need is met. The obvious answer is that for the first two years of construction little labour will be required in the preparatory stages. These two years of preparation are necessary in order to meet conditions when maximum work can be done in one year. The work can also be made flexible enough to shift work according to conditions. The two years of preparatory construction are essential in order to avoid delays at a later time. The same conditions apply to off-site labour in relation to industry. In other words, it would be a fallacy and poor business to delay construction until defence requirements are met. No nation can go wrong in developing and improving the productivity of the primary resources of land and water. Food is next to guns and ammunition and anything that is done to improve food production is a benefit to the nation. Production of food for export will eventually have to pay for the guns.
This project will not require essential war materials as the dam is to be constructed of earth. Much of the machinery needed for its construction is now in use on other projects in western Canada.
In closing, Mr. Speaker, I should like to pay tribute to Dr. Thomson, director of the Prairie Farm Rehabilitation Act, and his able staff of engineers and consultants, from whose reports I have drawn heavily in the preparation of this address. I would ask the government and all hon. members earnestly to study the evidence which has been tabled, so that they may satisfy themselves as to the necessity and urgency of this project.
I would ask hon. members to consider the desirability of stabilizing the economy of a 80709-133
The Budget-Mr. Blair province which, in the past, has attracted, developed and given to the service of Canada parliamentarians such as Nicholas Flood Davin; Mr. Motherwell, former minister of agriculture; Mr. Dunning, former minister of finance; Right Hon. J. G. Gardiner, Minister of Agriculture; such legal minds as Mr. Justice Turgeon, Mr. Justice Martin and Mr. Justice Brown who have served so often and so well on many important commissions; such representatives in external affairs as the same Judge Turgeon, and the incomparable Judge T. C. Davis; such engineers as General Andrew McNaughton, of our international joint commission; Dr. C. J. Mackenzie, chairman of the national research council; such medical men as Dr. George Ferguson, whose pioneering work in the field of tuberculosis has brought health to thousands of our people and fame to this country; the late Dr. Blair, who contributed so much to the treatment of cancer, and whose cancer clinics in Regina and Saskatoon are models of their kind.
I would suggest that if there still remain some doubts in the minds of the government as to the necessity and feasibility of this project, they seek the advice of some of the men I have just mentioned.


Mr. W. G. Blair (Lanark):: Mr. Speaker, the speeches this afternoon in the debate on the budget were devoted mainly to financial matters. I intend to introduce a new subject tonight, the consideration of the great dairy industry of Canada.
However, before entering upon the subject of my speech, for the information of the house I should like to read some of the propaganda that I found in an old pamphlet put out sixty years ago by the dairy people in the Department of Agriculture. Some of the expressions we may consider peculiar, but I think they will be found interesting. The pamphlet deals with the export of cheese, and goes on to say:
Exports of cheese from Canada exceeded in value total exports of cheese from the United States. Soil, climate, cattle, transportation facilities in Canada are admirably adapted for the prosecution of successful dairy farming.
The dominion government has established experimental dairy stations in different parts of Canada, and the provincial governments manage travelling dairies and dairy schools for the' education of those interested in that branch of farming.
There are over 1,500 co-operative cheese factories and creameries in Canada. In most of the provinces there are excellent opportunities for intelligent farmers with some means to make dairyfarming pay well.

The Budget-Mr. Blair
And hon. members will note the reference to "some means".
There are great areas ot unoccupied fertile land in the Canadian northwest and in the older provinces of Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Manitoba and British Columbia. Improved farms can be purchased in the neighbourhood where all the snug conveniences of life may be enjoyed.
That was the propaganda sixty years ago -the mention of the snug conveniences of life.
Free farms of 160 acres can be obtained in the Canadian northwest. For information apply to the Department of the Interior, Ottawa, Canada, or to James Anderson, suite 509, Stock Exchange Building, Chicago, Illinois.
I like that homey expression about the snug conveniences. Tonight I am going to discuss the dairy industry of Canada as one might find it in my own county, the county of Lanark. I am well acquainted with the farming district in the county of Lanark, and a large part of that county is peculiarly adapted to dairy farming.
Lanark has been recognized for years as an important centre in the dairy industry in Canada, especially in cheese production. The land is suitable for this type of industry. It has large areas of pasturage, well watered, and has fertile valleys capable of raising crops for the winter feeding of stock. For over sixty years Lanark has been closely associated with the production of cheese, especially Cheddar cheese for export and for domestic consumption.
Cheese is produced mainly in the months from May 1 to the middle of November, and factories are closed during the winter months. There is practically no winter cheese manufactured during the winter season. Dairy farming is an occupation which requires long hours of hard work-not even a six-day week. Even on Sundays the cows must be milked and cared for; milk must be pasteurized and cooled in order that it may reach the market in good condition the following day.
Not only that, the dairy herd requires constant care and supervision and it takes years to build up a good dairy herd and to secure high production. But there is another fact that is very apparent, and that is that better breeding has lessened the immunity to diseases of cattle, such as tuberculosis, and so on, and has left the high-grade herd owner liable to serious financial losses, if his herd should become infected.. In addition to the purchase price of high-producing dairy herds, there is the cost of maintenance of equipment, barns, silos and so on, as well as labour. The overall cost of production makes dairy farming an expensive proposition,


Dairying is one of the most important industries in Canada. Almost 450,000 farmers are dependent upon the receipts from the dairy industry as a source of income. The industry provides two million Canadians with either all or part of their livelihood, and this includes those engaged in the production, processing and distribution, as well as those supplying various services and equipment. It contributes more than $600 million annually to our national commerce. As a source of income, the products of dairy cattle rank first in farm income. In addition to milk and its products, 40 per cent of the beef and 60 per cent of the veal consumed by Canadians are products of dairy cattle. Food is of course the main product. Bottled milk, butter, cream, cheese, ice cream, powdered milk, evaporated milk and many other types of food are provided by the dairy herds. Health authorities point out the value of dairy products as one of the most essential foods.
Dr. L. B. Pett of the nutrition division of the Department of National Health and Welfare has stated that no type of food is more important to health and good nutrition than milk products, and that no type of food will receive greater emphasis in the future of Canada and the rest of the world. Milk is regarded as the perfect food. Nutritionists point out that dairy products supply 81 per cent of the calcium required for the human body, 57 per cent of the riboflavin, 17 per cent of vitamin A and other equally important vitamins. One pint of milk per day will provide an adult with 93 per cent of the minimum requirement of calcium, 83 per cent of riboflavin, and high percentages of other necessary vitamins. The Canadian housewife spends 20 cents of every dollar for milk and dairy products, but in return she gets more than one-third of all the nutrients she feeds her family.
I was rather pleased that the hon. member who preceded me brought up the question of conservation because conservation is closely associated with the dairying industry. We are now spending millions of dollars each year on conservation and we are constantly being warned about exhausting our soil and water and so on. Two years ago this house passed a bill dealing with conservation, while in Ontario a select committee of the legislature brought in an important report after it had studied the matter for months.
This is a most important subject which covers a wide range. It has to do with the control of rivers and streams and the building of dams; it has to do with replanting trees which have been cut from our hillsides and

forests, but the important part of conservation is that concerning the proper use of the soil because so many things are dependent on it. A million dollar dam will be of little use if the soil is eroded and the rivers and lakes fill up. What was formerly good farming land will then become desert and will have to be abandoned as far as agriculture is concerned.
I said that there was an important relationship between conservation and the dairying industry. The raising of livestock provides the best and cheapest method of putting back into the soil most of the good which the raising of crops has taken from it. Good dairy farms do not become worn out and useless. A well balanced dairying program returns the refuse from the dairy barn to the land, plus the necessary commercial fertilizer. A competent dairy farmer keeps up the fertility of his land; he builds up his land, he does not destroy it.
It is interesting to note that after years of cropping a pasturage will not likely have those ingredients which will provide the quantity of mineral foods and vitamins which are necessary and which may affect the health of our population. There is no use talking conservation if we allow farmers continually to crop off their land, to cut down their wood lots in an effort to make a living for their families, without restoring and revitalizing the soil. Such a policy is little short of national suicide.
The place to start organizing conservation is on the farms, and the way to do that is to do something to stop the water running off the fields, to conserve moisture and to prevent erosion which is constantly increasing. In order to do this we require first-class farmers with up-to-date methods. You cannot expect a discouraged farmer to practise this kind of farming. As I have said there must be a healthy dairying industry in order to preserve the land. This dairying industry should not be made up of discouraged farmers. It should be an.industry which will give an adequate return for the investment; it should be an industry which will stop soil exhaustion and thereby aid soil conservation.
The link between the dairy industry and conservation cannot be too strongly emphasized. One cannot expect under present-day conditions that the dairy farmer will show much interest in conservation. He is much more likely to mine his soil to the limit in an effort to produce as cheaply as he can, and then when the soil is non-productive to move on to some other land or into the town or city where we have our program of development and industrialization. Factory 80709-133J
The Budget-Mr. Blair wages and shorter hours will look more attractive to a chap when he is discouraged with prices and competition.
In the long-term view we can therefore visualize abandoned farms unless there is a future for the dairying industry much brighter than exists now. It is possible to see abandoned farms in Ontario at the present time. I am sure that many hon. members have been in localities in Ontario where farms have been abandoned.
I come now to some of the factors which adversely affect the dairying industry. It is true that the farmers have a high-priced market for their export milch cows. During the past year approximately half a million live cattle were shipped to the United States, an increase of 40,000 over 1949. It is true that there are high current prices for almost everything that can be turned into hamburger meat. At one time the dairy farmer looked on the raising of cattle as a side line, but now the situation is reversed and most farmers look on milk as a side line. They are selling many of their calves, heifers and older animals. It is a poor calf that will not bring $35, and even an old bull will bring $400 or $500 for hamburger meat. He can sell any kind of animal that is considered to be beef at what were hitherto unheard of prices.
The export market for purebred dairy animals, even the poorest, has been exceptionally good. The net result is that the man raising dairy cows has not had to bother too much about his milk cheques. It is paying him more to let the calves run with the cows than send his milk to the manufacturing plant at something over $2 per hundred pounds, which was the 1950 price for milk used in the production of cheese and butter. The farmer has to live and he certainly cannot with what he gets from his milk. On the average farm this price means keeping four or five cows for a whole day in order to get $2. If a farmer has no other revenue he would show a loss in his books for last year's operations.
It is interesting to note some of the figures obtained as a result of a cost of production survey carried on by the Ontario department of agriculture in connection with the dairy herd improvement association. These figures were given by Dr. H. R. Patterson at the Ontario cheese producers meeting in Toronto last January. The experiment was carried out in Lanark county.
The figures show that between May 1, 1949, and April 30, 1950, the average dairyman in the Lanark association lost $147 on his milk production. The association is made

The Budget-Mr. Blair
up of twenty-four members, of whom twenty-two are cheese producers. The average production per cow in the twenty-four herds which average eighteen cows each was 7,675 pounds of milk. This accounted for those cows which were milked for ten months or longer. The average total revenue from milk was $3,052, while the cost of production totalled $3,199. The average cost of producing one hundred pounds of milk was $2.83. Dr. Patterson stated that the results showed that labour and feed costs made up from 75 to 80 per cent of the total cost of producing milk. The average man-hours required to produce a pound of butter was 0-4 hours.
In this survey by Dr. Patterson he allowed the farmer 50 cents an hour for his work. This is less than what the most unskilled labour any place in Canada would receive. He pointed out one peculiar fact which came to light in his survey. That is the amount of pasture which was available. This shows that all the pastures are not being utilized for dairy purposes, or even for the purpose of raising stock, when there is so much land available for it.
I come now to the matter of competition from other products affecting the dairy industry, and I refer especially to margarine. Let there be no misunderstanding. I am not unaware of the high prices paid by consumers for foodstuffs in Canada, nor do I blame any householder for purchasing margarine as .a substitute. In view of the high price of butter you cannot blame the householder for buying margarine. I admit the food value of margarine as a spread under these conditions. Any criticism of this dairy substitute Is apt to draw a barrage of words by way of letters to newspapers and editorials with the usual remark-


Joseph Henry Harris: It should carry a
tax.


William Gourlay Blair: -namely, why should the Canadian people be deprived of this nutritious product? Very few of these people have any knowledge of or experience in the dairy industry. They seem totally unaware that the industry provides work for two million people. I am also aware of the fact that Canadian farmers are purchasing margarine. It is not my intention to enter into any argument regarding this product as a food, but rather from the economic standpoint. The vegetable oils used in the main products which are replacing Canadian dairy products-


Mr. Cruickshank:: And whale oil.


William Gourlay Blair: -are almost entirely of foreign origin. The water-and I learned that water forms a substantial part of some of these


products-and the salt are Canadian. It is also true that we might be able to build up a Canadian-produced oil industry from soya beans, rape seed or sunflower seed, but we know what it costs to produce oil this way. Few farmers would be foolish enough today to turn over a large acreage to these products, and at the same time have hanging over their heads the constant threat of further price reductions in foreign and more cheaply produced vegetable oils.
We must remember that the duty on edible oils produced within the empire was reduced from 13 per cent to nil about a year ago, and this is not the end. An application before the tariff board to hear an appeal launched by Canada Packers against a ruling of the Department of National Revenue has been postponed. That hearing was to be held on the 12th of March. The hearing concerns the fact that processed cotton oil and soya bean oil shipped in mixed loads in tank cars are dutiable at 20 per cent ad valorem but raw oils are subject to 10 per cent a ton. As I said, the hearing has been postponed, but it would indicate that the manufacturers of margarine are not willing to process these oils in Canada and want to bring them in already refined.
At the time parliament removed the duty on edible oils coming from empire countries there was little reaction from the dairy industry. At that time margarine was made from cottonseed and soya bean oils imported from the United States but in the last nine months of 1950, according to reports of the dominion bureau of statistics, over five and a half million pounds of coconut oil used in margarine were imported. In 1939 this type of oil could be purchased for 6 [DOT] 1 cents per pound.
Kreamy Wip is a new product being produced in Canada which is sold largely to the baking trade. It has a vegetable oil base, with possibly some skim milk or skim milk powder added, but no natural cream. This product has replaced hundreds of thousands of quarts of medium cream yearly, arid for some dairies that means quite a high percentage of all the cream formerly sold. The product is being used' by the baking trade to replace whipped cream used in such things as cream puffs, topping for pies, cakes, et cetera. This means another big market has been lost for milk producers. The oil product sells at a little more than half the price of natural cream.
In a few cities in the United States they allow a product to be sold today that resembles milk and is sold to replace it, but which is actually only skim milk fortified with vegetable oils to replace the cream which has

all been removed. This product replaces whole milk for drinking. In many of the states vegetable oils are allowed to replace natural cream in ice cream mixes. It does not seem fair that Canadian dairymen should have to meet this type of competition. I should like to give you a set of figures which are authentic. I obtained them from the national dairy council, and while there may be some small changes I believe they are correct. The first has to do with the butter production in Canada. The table is as follows:
Total Butter Production in Canada (000's lbs.)
Creamery Dairy Total
1948	
285,629	62,845	348,4741948	
279,805	52,852	332,4571S50	'	
262,500	*	50,000 *	312,500*
* Estimated.


James Garfield Gardiner: Are these figures pounds?


William Gourlay Blair: These figures are thousands of pounds. Butter production in Canada in 1950 was nearly 36 million pounds lower than in 1948. Now we come to the consumption of creamery butter in Canada. The figures are as follows:
Consumption
1949
of Creamery Butter in Canada (000's lbs.)
	 305,553
	 260,034
	   276,959
Consumption of creamery butter in Canada in 1950 was nearly 30 million pounds lower than 1948. Then I come to figures dealing with farm cash income from dairying in Canada. The table is as follows:
Farm Cash Income from Dairying in Canada
1948		 $386,553,000
1949		 350,010,000
1950		(estimated) 323,993,000
That is as close as the figures could be obtained. Farm cash income from dairying in 1950 was $62-5 million less than in 1948. Then I come to margarine production. The figures are as follows:
Margarine Production
1949	 73,958,000 lbs.
1950	 94,032,000 lbs.
I wish to remind hon. members that there are two provinces in Canada where the sale of margarine is not permitted. Then I come to margarine consumption. The figures are as follows:
Margarine Consumption
1949		 71,946,000 lbs.
1950	!!!!!!!!!!!!	 93,648,000 ibs.
Consumption of margarine in 1950 increased 21-7 million pounds or 30 per cent over the
The Budget-Mr. Blair 1949 total. Now we come to the total production of milk in Canada. The figures are as follows:
Total Production of Milk
million lbs.
1948		 16,730
1049		 16,789
1950!;;!;;;!!!!!!!!	 16.345
That is down 2-7 per cent but it amounts to nearly half a billion pounds. One cannot help but draw certain conclusions from a study of these figures. The effect of foreign vegetable oils on our Canadian economy cannot be considered as an immediate problem alone. The end of it is not in sight. It constitutes a permanent threat to the Canadian dairy industry, and I cannot see that the industry can control this threat until such time as we decide to exercise control over this unfair competition. Consumers and organized labour and its leaders should give consideration to this whole matter of dairy substitutes. It must be conceded that there is an appeal in cheap food in this time of high living costs; yet should we accept the policy of cheap food at any cost? Should we demand cheap food and cheap dairy products at the cost of jobs and unemployment.
One must take the long-term view of this matter. There seems to be an attitude on the part of some people of not wanting to compare the prices of dairy products with those of other commodities. High prices do exist in other commodities, both foods and manufactured goods, and they cause hardship; but dairy products are expected by the public to be sold at levels lower than those of other commodities. We must remember that the 350,0-00 to 400,000 dairy farmers, together with their families and all the people from whom they buy, consume large quantities of manufactured products. We cannot afford to have the income of that large group of people so reduced that their buying power will be impaired. We frequently hear it said, even by some in the dairy industry itself, that this industry should adjust its prices to meet this type of competition, that is, to meet competition on a price basis and fight vegetable oils in that way. Under present conditions this is utterly impossible. The present mark-up, wholesale and retail, of profits on vegetable oil is five or six times as high as on dairy products. It would be possible for the vegetable oil manufacturers to reduce their prices considerably and still make a profit. If dairy farm producers tried to meet this competition on a price basis their income would be so reduced that within a few months we would have serious unemployment in that industry. Under present conditions the producers of milk and cream, as

The Budget-Mr. Blair a group, are expected to meet the competition of the lowest priced foreign products. Our fiscal policy should be based on protection for Canadian workers against lower priced goods from other lands. If workers in other industries were asked to produce at prices which would compete with goods from all other countries, many of our largest industrial plants would be put out of business. Workers in other industries are asking and getting higher wages and tariff and other protection, but the dairy farmer is expected to meet foreign competition.
This brings up another interesting point, the question of monopoly. One great company, with ramifications extending all over the world, is dominant in the world's edible oil industry. That company has plants in Canada, and is very much to the fore in the vegetable oil and margarine field. It can bring these oils by ocean-going tankers into the very heart of our manufacturing centres. It can buy them in the cheapest markets where they are produced under conditions we would1 not tolerate in Canada. At present it can bring quantities of these oils into Canada without having to pay any tariff whatsoever. If the price of United States oils, which are being used so much at present, gets out of line with the oils from empire countries, this firm would be in a position to dominate the Canadian edible oil industry and could dominate the great Canadian dairy industry on which hundreds of thousands of Canadians are dependent. This is one situation to think over when we hear so much talk these days about monopolies.
There are certain questions which come to mind when we give consideration to this question. How much employment does the whole margarine industry give to Canadians? What has become of the promise to use Canadian-produced oils? What effort is being made to interest farmers in growing the necessary plants? When this issue was debated in the Senate one of the great talking points was the establishment of a new industry for Canadian farmers. How is this going to end? What is going to be the ultimate effect on the dairy industry? Are we going to accept the position of an importing country in the world in so far as dairy products are concerned?
According to the brief of the federation of agriculture, recently presented to the cabinet, milk production is down about 8 per cent in the past five years. This amount is something more than would have been exported before it could be assumed that Canada is self-sufficient in dairy production. In the meantime the Canadian population has increased by about one and a half million
[Mr. Blair.I
persons, with the result that Canada, which is now a dairy product importing country, brought in some seven million pounds of cheese, five million pounds of butter, and considerable quantities of milk powder. It does seem a disgrace that Canada should be importing dairy products.
There was a time when the making of cheese for export was a great industry. Now we even import cheese. Some six or eight million pounds of New Zealand cheese was imported in November 1950. This was sold at 34 cents to the processors, or several cents more than our home-made Canadian cheese. Importers claimed that New Zealand cheese was required for processing as a result of government buying policy. Stocks of new Canadian cheese were abnormally low. Cheese was requisitioned in Canada for British export, but we could not fulfil our bargain. It is difficult for Canadian cheese producers to understand why their product was requisitioned at 28 cents and New Zealand cheese was brought in to retail at a higher price. About 70 per cent of all the cheese eaten in Canada is some variety of processed cheese. The processed cheese firms, many of them subsidiaries of large American firms, have obtained a hold on the market in Canada. They buy cheddar cheese at the domestic market price, or in the case of the New Zealand cheese at 34 cents, grind it, heat it, add some color, then sell it in packages for 65 to 70 cents a pound. The sales of processed cheese were high, and it was a case of cutting sales or buying new cheese outside of Canada. Certainly if the export price of cheddar cheese is not better than last year, there will be little for export.
Before the Easter recess we had a debate on the wheat contract and the government saw fit to reimburse the western wheat growers to the extent of $65 million. I point out that other branches of agriculture have also suffered under similar circumstances. It would seem only fair that they also should receive compensation. Ontario and Quebec had millions of pounds of cheese requisitioned at prices below those of the United States at the time. The producer was deprived of his domestic market and the requisitioned price was below the cost of production. The producer had no option but to sell to the government. When discussing the further amount payable to the wheat farmers the Prime Minister (Mr. St. Laurent) said in the debate that the wheat farmers had "expectations". Apparently the cheese producers, after producing at a loss, were not considered to have "expectations".
Our cow population is almost half a million less than in 1945 according to the dominion

bureau of statistics, but Canada's population has increased by a million and three-quarters since 1945. The human population has increased and the cow population has decreased. Prices paid by farmers in Ontario for feed have increased. Higher feed costs, higher wages and shortage of help on dairy farms, competition from cheap foreign oils, low prices for dairy surpluses, all are forcing the farmers to cut down production. Lack of production is now forcing upward the price of products like butter.
Then again, there is the episode of the New Zealand butter. Under the ruling _ of the government approximately five million pounds of New Zealand butter was imported for the Canadian market. This butter was priced at 56J cents per pound at seaport, while the floor price of butter was 53 cents per pound. This is another matter of difficult competition for Canadian dairymen. But when, owing to shortages of butter, the price per pound reached a high of 82 cents, the price of margarine was raised without any reason or provocation whatever. The Canadian consumer suffered at the hands of the interests controlling margarine. And yet we have in Canada a great dairy industry unable to support its own domestic needs or unable to fulfil an export contract which is a skeleton of our former export trade.
We are now building up our defences against the danger of communist aggression, and we must organize our economy so that we can make the greatest possible contribution to the Atlantic pact. It is just as important that agriculture be organized in any campaign for preparedness or actual war, as it is that there be organization of manpower and industry. This vvas pioved in the last war when Canadian agriculturists produced food for the allies, and it was one of the outstanding features of our war effort. Even then, when controls were first instituted, the price of farm products was not on a level with that of other commodities.
Conditions have changed since 1939. Then there were surpluses, manpower problems, and prices were depressed. Farmers were anxious to get into high production. It was simply a matter of telling farmers the requirements and to fix their prices. The result was that in the ten years from 1939 to 1948 we exported food products to help feed our army and our allies. We exported over a billion pounds of cheese, half a billion pounds of evaporated milk, over six million pounds of milk powder, and practically supplied the entire British ration for bacon. We exported nearly seven hundred million pounds of bacon in 1944 alone.
If we had kept up such exports after the war, to help relieve famine in Europe and
The Budget-Mr. Blair Asia, we might not be in the position in which the world finds itself today. Hungry people are open to the propaganda of communism.
What is the position of agriculture in 1951? With the single exception of wheat we have no surpluses of food. It would require a tremendous amount of reorganizing to start to feed our allies, in comparison with the situation in 1939. In one year alone, 1942, we sent Britain 150 million pounds of cheese. It is doubtful if we could send 35 million pounds this coming year. There is no available manpower for farms, and dairy farmers require men who have had some training in the occupation. Surplus cattle, and surplus hogs, on which to start building, do not exist. Owing to the demand for export cows, and the high prices paid for meat, our stock has been depleted. Inflation has priced our products out of the market. Cheese and milk producers cannot produce at a world price and live and buy at inflated prices in Canada.
I remember an interview that the Minister of Agriculture (Mr. Gardiner) gave to the Canadian Press when he landed in Montreal after his last trip to England, in which he stated that he cannot conceive of Britain offering prices high enough to stimulate extra production. He stated that the British would like to buy Canadian products but that they are not willing to pay the current domestic market prices in Canada and the United States.
In the event of war, me food production in this country would be in a deplorable state in relation to that which would rightfully be expected of. us as a member of the Atlantic pact. If we attempt to plan anything like the amount of food required in the last war, much reorganization will be required before it can become available. It would require two or three years before cows could produce milk products, and hogs for bacon could be provided. This brings us to two alternative;. Are we going to start now in the hope of getting necessary production in two or three years, or will it be necessary in the event of war tomorrow to commence rationing and to reduce the standard of living at a time when we are calling for our greatest effort?
Under the Atlantic pact I believe that one of our greatest contributions would be food. In any war, or preparation for war, full production of agricultural products rates in importance with guns or aeroplanes. As part of our defence plans of the future we cannot afford to let the great dairy industry deteriorate, but it must be maintained as a great national industry providing employment and food for our own people and for our allies.

The Budget-Mr. Carroll


Mr. W. F. Carroll (Inverness-Richmond):: Mr. Speaker, I do not intend to spend much time on the budget proposals as such. Everybody knows why we are greeted with a budget asking for higher taxation. As every person knows, that higher taxation is to be applied to our defences, in order to preserve peace in the world. I do not think there is anybody either within sound of my voice or across the broad dominion who is not pleased with the present government for having done what they are doing in the matter of defence and economic planning.
I want to say that the criticism made by the hon, member for Greenwood (Mr. Macdonnell) was moderate and fair, as was also that of the leaders of the other parties. One thing about which some of them were perturbed was that in their opinion we were asking for too much, that we were asking to impose taxes that would give us $200 million or $300 million of a surplus this coming year. I would hope that it would be better for the Minister of Finance (Mr. Abbott) to budget for a surplus than for a deficit; because if anything should happen, we shall have the money to spend, and I myself have confidence that the minister will spend this surplus, if there is any, to the advantage of Canada.
All those who have spoken congratulated the minister on the work he put on the budget and the wonderful presentation he made. One of the leaders-and I think it was the leader of the Social Credit group-almost came across the floor of the house to hug the minister; and he thereby brought forcibly to my attention the old saying, "beware of the Greeks when they bring you gifts." If the minister knowingly and consciously did the things of which he was accused by the leader of the Social Crediters, he should not be loved or admired, and it should not be said that he is a good minister of finance. I am not going to congratulate the Minister of Finance on the budget. We on this side of the house knew that he would give us a good one. I do not think it is a place for congratulations at all; because everything the Minister of Finance does in the realm in which he is working is always good; and I do not think we should pick out this one particular thing on which to congratulate him.
As I said, the higher taxation of this budget is for the purpose of Canada's defence in order to avert war. The question arises here, and different opinions have been expressed by the Minister of Finance and those on the other side of the house who criticized the budget, as to the effect the budget is going to have on inflation. It is a question which is worthy of consideration and

worthy of argument. So far as I am concerned, I am willing to adopt the opinion of the Minister of Finance in regard to inflation and what effect the budget will have on inflation. Nothing definite can be said about it on either side.
There are of course many theoretical economists in the country today who bring forth various ideas which are sometimes dreamy, sometimes hazy and sometimes without a real basis of foundation. I always think that we should abide by, live up to and try to follow the natural laws of economy rather than be led away by the theoretical people whose ideas have never been put into practice and who do not know what the result may be in the end. That is all that I am going to say on the budget as such.
A great deal has been said by the public and in this house to some extent about the situation in my native province of Nova Scotia. For years and years, up to about fifteen years ago, we in Nova Scotia blamed all our ills, or many of us in Nova Scotia blamed all our ills and all of our depressed areas, on the fact that we had confederation. There is no more distorted argument that could be made than that any of our ills were due to the fact that we entered confederation. There was a political propaganda started in Nova Scotia before confederation became a fact. It was followed up after confederation became a fact, and by very able men who prejudiced the minds of the public and the minds of the mass of the people of Nova Scotia against confederation. They succeeded in doing that; they succeeded in advising the people of Nova Scotia that confederation was no good to us; that it was better for us to get out of the country; that we could get nowhere because we would be overwhelmed by Quebec and Ontario.
This was purely political propaganda, Mr. Speaker, because the man who took the greatest part in the leadership of this propaganda was one of the men who first talked about the confederation of the British provinces in North America. And strange to say, after a few years, men of that calibre who had decried confederation and advised the people of Nova Scotia not only to get out of confederation but to leave the province, accepted high office in the government of Sir John A. Macdonald. After a time this prejudice seemed to become subdued, but in 1883 an election took place in Nova Scotia, and that election was on the issue of confederation, to get away from confederation, to make us a separate government entity in this country, in other words secession. The election was won on that basis. After the election nothing was done about it of course,

and the gentleman who won the election afterwards came to this house as minister of finance in a dominion government, and a very able minister of finance he was. Still, down the years there was that same preaching amongst certain people in Nova Scotia against confederation, and it is only a very few years ago that the people of Nova Scotia made up their minds that they had enough of this stuff. They made up their minds that they were a people who would get along well in confederation, and there has been a wonderful change in the province of Nova Scotia in the last twenty or twenty-five years in that regard.
It is said that one of the results of confederation is that it took away from us our industries, our banks and so on and so forth. There was a movement of the banking institution of this country shortly after confederation, but it did not take away the banking institutions from the province of Nova Scotia. As a matter of fact, in every village, in every small town in Nova Scotia today we have branches of the various banking institutions of this country.
Then they say that it took away our industries. No, confederation had nothing to do with taking away our industries. Some industries were built in Nova Scotia before confederation. When confederation came the people who owned those industries saw that they could sell their stock in those industries, close up the industries and get their capital back, plus a splendid profit. That had nothing to do with confederation. It was the selfishness of our own people that caused this change in the industries of Nova Scotia.
Then, they talk about the days of the wooden ships and iron men. Yes, we had a wonderful shipbuilding industry in the province of Nova Scotia. The ships that were built there traded in the markets of the world, and it was a splendid outlet; but the time came when the people who were instrumental in building up these institutions, and many of them making fortunes out of them, did not have the vision, the foresight, to see that the end of wooden ships was at hand and that henceforth they would be made of steel. They did not have the vision and the foresight to see the trend of the time, of sails giving way to steam. The very first ship that crossed the Atlantic under its own steam was built in Montreal. I think it was called Prince William.
They put their money in their socks, or in some other place. They did not re-invest it in anything, and their children, their grand-80"oq-134
The Budget-Mr. Carroll children and their great-grandchildren no doubt are having a fairly good time on it today.
A moment ago I mentioned those who were interested in industry in Nova Scotia selling out their industries for their own selfish purposes, because they were getting their capital expenditure plus a very good profit. The industries were taken over by competitors in the central provinces. I should like to point out to you, Mr. Speaker, and to the house, the fact that there are some industries in Nova Scotia. There were some men in Nova Scotia who were true to their province, who had the welfare of the province at heart. I have only to look across the floor of the house-and I am not sure that he is now in his seat-to see the hon. member for Colchester-Hants (Mr. Stanfield) whose father and grandfather built up in Nova Scotia one of the finest and one of the most competitive industries in Canada.
If the other people who are engaged in industry had done the same as those who were engaged in that splendid industry at Truro-and I am referring to the Stanfields -we would not be complaining today about having no industries in Nova Scotia. I am bringing those facts to your attention, Mr. Speaker, and through you to the house, to indicate to hon. members and the country that I at least do not think that confederation injured Nova Scotia. I do not think that Quebec and Ontario stole anything from us. But I do think certain people in Nova Scotia who decried confederation for years did discourage the inhabitants of that province from trying to do anything for themselves.
Something has been said in this debate about decentralization of industry; much has been said both in the east and the west about that same subject. If in Canada today we have a defence industry, then I am all for spreading it around, both to the east and to the west, when the work can be done as well and within reasonable reach of the manufacturing price in central Canada. I say that under those circumstances it should be distributed both east and west. But I for one think it is an absolutely wrong idea, an impossible idea, to urge decentralization of industry as such, outside the defence industries.
There is only one party in the house that can discuss logically this question, and that is the C.C.F. I am not saying they are right or that they are wrong. The only political party in the house whose object is to nationalize our industries is the C.C.F.-and again I am not saying they are wrong. Indeed I expressed some very bold opinions some years ago on that very subject. But they are

The Budget-Mr. Carroll the people who can talk about the decentralization of industry, because if they came into power they are the only people who would put into effect the methods by which industry could be decentralized. I am not criticizing them for that at all; I have nothing at all to say about it.
But when I hear a good Liberal or a good Conservative, or a bad Liberal or a bad Conservative, talking about decentralization of industry in this country, then I say they are talking against their own better judgment, and talking in favour of a thing they would not dare talk about outside the political realm.
How can this thing be brought about? At the present time and under our present conditions in Canada, it is just as well to talk about striking the rock of Gibraltar and knocking it into the sea with a pebble as it is for this government to talk about the decentralization of industry in Canada. Why? All industries in Canada are within the jurisdiction of local legislatures; and until the dominion government, either on account of war or for some other reason or because of the coming to power of the C.C.F., takes that power, there will be no way of decentralizing industry.
It is said that a good friend in Ontario-I believe it was the premier, who is a splendid type of Canadian-made a statement at a dominion-provincial conference to the effect that it would be a good thing if that conference, as part of its work, would consider ways and means of bringing about a more evenly distributed industrial development. Well, about two weeks after Mr. Frost made that statement there was sent abroad in this country, to the United States and to England a booklet showing an ambitious program of the Ontario government. No one blames them for that. It indicated what marvellous industries they have in that province, what marvellous opportunities there were for new industries, and stood as an invitation to all and sundry who wanted to start new industries to do so in Ontario.
I do not know whether the premier of Quebec has made comment about decentralization of industry; but, whether he did or not, certainly they are not showing much effort along that line in that province, because today they are advertising to the world their waterpower facilities, their labour and everything else they have, in order to get new industries. So much for that.
We have a splendid steel industry in Sydney, with ramifications throughout the country. Up until four or five years ago it is my humble opinion that that industry was not giving the service to this country it should have been giving, by way of fabrication of small steelware and the like. I


believe at the present time however that the management of that industry, presided over by Mr. Forsyth, who is an ambitious Canadian, a progressive Canadian, and a Canadian who wants to do the best for Nova Scotia and the industry with which he is connected, will bring about a condition whereby we may expect better things. Today and for the last year they have had all the orders for raw steel they wanted, and all they could fill. I noticed some time ago, in a Canadian Press dispatch, where the president of that organization had said that plans were under consideration for the expansion of finished steel products facilities, and made the further statement that such plans required a lot of technical study before one could talk in terms of specific undertakings. It is too bad those technical studies were not made ten or fifteen years ago, rather than at this late date. Personally however I have absolute confidence in the Dominion Steel Corporation of today, so far as its management is concerned. I know they will do all they can to bring to the forefront and to improve that steel industry. An organization representing the steel workers and the coal miners came to see the government some time ago and I hope pointed out to the government some of the things that might be done in the way of fabrication of steel by the Dominion Steel Corporation.
A day or so ago I had something to say in this house about the establishment of a steel plant upon the shores of Canso strait. After I went out of the house a friend of mine, not from Nova Scotia, said, "Bill, you must be crazy." I said, "I don't know, I think perhaps I have always been crazy." As an example of my insanity he referred to my suggestion to establish a steel mill on the shores of Canso strait. I was not crazy, although it may be a dream. I am not asking the government to build this steel plant; all I am asking is that they give it the same assistance that they gave to other steel plants in the basic stages. Between Point Tupper, the terminus of the Canadian National Railways, and Port Hawkesbury there is in my humble opinion.-I am not an industrialist, I am not the son of an industrialist nor am I the father of an industrialist-the finest site for a steel mill that can be found in Canada, if not on the continent.
Why do I say that? The strait of Canso is 600 miles from Seven Islands, which is the terminus of the railroad from the Ungava iron ore field. That is over 750 miles from Montreal, and as you go along the St. Lawrence it is further still. Unless the St. Lawrence waterway is built overnight I would think that the iron ore boats from Seven Islands to Montreal or further up will have

a hard time navigating the river. There is ail kinds of deep water in the strait. There is an absolute supply of good coal from which could be generated the power to operate the steel mill. The other facilities necessary for an iron mill are available.
There is open water all the year round on the south side of Port Hawkesbury right through to the Atlantic. We would be close to Saint John where they are fabricating steel today and it would be nearer than any other point I know of to Toronto, Montreal and Hamilton which could be reached during the season of navigation. It would be close to the fabricating plants along the Atlantic coast of the United States, especially to those which I understand are to be established in Connecticut.
I am serious in bringing this matter to the attention of the government. I hope that the Minister of Trade and Commerce (Mr. Howe), who perhaps knows more about industry in this country than any man I know of, will see that at least an investigation is made into this project. I said the other day that this would not be in competition with the Dominion Steel Corporation, but it does not make any difference to me whether it would be in competition.
We are short of steel in this country, and I hope that for many years the demand for steel will keep increasing whether there be war or no war. I have that faith in Canada that she is going ahead industrially and otherwise, and that for many years we will be unable to supply our raw steel demands. I think it would be worth while to give this matter some consideration.
I am not suggesting this as a war undertaking. I do not have much enthusiasm for building up war industries, especially in our own province, and then having ghost towns when the war is over. I am interested in industries in our own province, and any other province as far as that is concerned, that will have stability, that will be in existence as long as there is any requirement for the production.
Right at the spot I am talking about there is a railroad which passes through three or four mines. It is true that the mines in Inverness are in a pretty precarious way, but I understand that a geologist and another engineer are looking into the situation and have indicated that they believe there is a body of coal there which may be developed. Apart from that, there is plenty of coal in Inverness to supply the necessities of this steel plant. If we have not got it there, we could get it from the Dominion Steel and Coal Company.
The Budget-Mr. Carroll
I am sorry to say that just the other day the Prime Minister (Mr. St. Laurent) said something about the great difficulty of producing good steel in this country because of our coal. That matter was investigated four years ago by a chemical scientist in Montreal who was asked to inquire into the question of making steel with coal produced in Nova Scotia. After what I hope was a fair and impartial analysis and:	investigation he
reported that while it took more of certain kinds of coal produced in Nova Scotia to produce a ton of steel than it did of other coal, so far as the quality of the steel was concerned there would be no difference. Our government has been doing something as to the differential with respect to the Dominion Steel and Coal Company. I hope I have at least brought to the attention of the government something which I think is and will be of lasting benefit to our end of the province. I know that our minister from Nova Scotia, who is sitting in his seat now, has been good to that province. He has been doing a good job in so far as Nova Scotia is concerned. Possibly I should not say this because our western friends and those from New Brunswick might be jealous, but he is doing a good job in getting defence orders for the province of Nova Scotia.
There were some good things left in Nova Scotia after the last war. For example, the government built a large plant at Trenton for mounting large guns and that sort of thing. The Dominion Steel Corporation, or perhaps I should say the Nova Scotia Steel and Coal Company, bought the plant. It has been a wonderful asset not only to Trenton but to the whole of the province of Nova Scotia, and has been a wonderful asset to the Dominion Steel and Coal Company. Last year they built there the largest coal hoist there is in Canada today, and placed it in the coal mouth at New Aberdeen. At that plant they are manufacturing today the material they want to implement the promise they made to the government some time ago when they received their loan to do certain things in the mines.
Then there is another place at Pictou, and also at Dartmouth. As I said before, I am not much interested in building defence institutions anywhere in this country if they are only to have a wartime life. It does good for the time being in so far as money is concerned, but otherwise it does no good. Comparatively speaking, I suppose that during the last war there was as much money spent in the province of Nova Scotia as in any other province of Canada.
There is one other matter that I wish to bring to the attention of the government.

The Budget-Mr. Carroll The announcement has been made that the government is going to cut out all unnecessary expenditures. I have always been hopeful that no government in this country would spend money on something that was unnecessary. I do not quite understand that statement. I would not like to see the public services of this country suffer because of our war effort. Talking now of my own constituency, it is just as important to keep the public services going and in good repair as it is to put down communism, although I think that further steps should be taken so far as some of the communistic leaders are concerned. However, that is a matter for the judgment of the government. I represent a constituency that, with the exception of one other in British Columbia, has perhaps the longest coast line in Canada. That coast line is inhabited by Scotsmen, Irishmen, Englishmen and good French Acadians who have established themselves along the shores. In times gone by they have made their living, and are doing so now, from their little farms and the fishing industry. Through the years the government helped to supply them with breakwaters where they were necessary in small communities to give some protection to their boats, because they can only fish in small boats. There were wharves here and there.
During the first world war these public services were neglected, and in the last world war they were neglected. After the first world war it took more to put them in decent shape than it would have taken to build new ones. The same thing is happening now. I do not wish to see any unnecessary expenditures. However, if there is to be an attempt to keep away from what the government calls unnecessary expenditures, I wish to protest most strongly that the government should not do anything to interfere with public services such as I have mentioned.
Many years ago the town of Inverness had a flourishing fishing fleet. Thousands of barrels of mackerel were caught. A mine was opened there and the people left their boats to rot on the shores. They left their farm implements to rot in the fields, and went into the mine. So far as a worth-while occupation was concerned, their occupation was gone. Today I am told that the coal mine is about finished. I am hoping that the government will see to it that that little harbour is opened up again to give some access to small fishing boats. There is a recommendation to that effect from Nova Scotia engineers.
' To indicate what can be done so far as keeping up public services along the lines I have suggested is concerned, I bring to your attention the village of Cheticamp,


which years ago was a flourishing fishing village with a fairly good harbour. Then an industry was started there, fishing prices were bad and the people practically gave up their occupation-not in the sense that Othello's occupation was gone-but they really entered an occupation for which they were not fitted. Four or five years ago the fishermen of that village got together and with the help of the federal government and the Nova Scotia government they organized a little freezer for their bait. No village in the province of Nova Scotia has made such advances as the village of Cheticamp has in the last four years.
This government is also doing something along other lines. In the town of Louisburg a large fish plant is being built. That is a place where big vessels go in and out, and the little fellows are a bit too far away. They cannot get there. There is also splendid work going on at Petite de Grat. A United States company has come in there and the co-operative fishermen have leased their establishment to this fishing company. That is going to make a tremendous difference. For all that I for one thank the government, and would thank any other government that was in power. What I am trying to impress upon the government is that the necessities of the times even in war do not warrant not keeping up the public services of the country which are of advantage to any particular place.


Mr. Clarence Gillis (Cape Breion South):: Mr. Speaker, I had intended to make a rather academic speech on this budget a few days from now, analysing its economic and financial aspects; but the remarks of my learned and hon. friend who just took his seat (Mr. Carroll) provoked me into rising and saying something at this time entirely different from what I had intended to say. During the course of his remarks the hon. gentleman stated that he had said something a few days ago, and he did not know why he said it. I am sure if he reads Hansard tomorrow he will wonder why he said a great many of the things he said this evening.
Just by way of a basis for the rest of what I have to say, after listening to the hon. member this evening anyone from this part of the country who is not familiar with developments in the maritimes over the past thirty years would think everything was fine, there were no problems, the government had found a solution to every difficulty, and that the troubles existing in Nova Scotia, New Brunswick, Prince Edward Island and now in Newfoundland, are entirely the responsibility of the people themselves because of their lack of vision and their lack of confidence in the future of that part of the

country. In effect, that is the impression the hon. member left with me in the course of his remarks. I want to reiterate what I have said a good many times, that the problems of the maritimes are not entirely due to any lack of initiative or confidence on the part of the people of that part of the country. You need not take my word for it; go back to confederation. I think one of the most respected men to ever sit in this house was the late Norman Rogers, who conducted an economic survey of the maritime provinces. He made a report, which is in the library and which I have read a good many times. My hon. friend should also read it.


William F. Carroll: I have read it.


Clarence Gillis: Well, you have forgotten most of it.


William F. Carroll: But I do not believe everything that is in it.


Clarence Gillis: A great deal of money has been paid for many reports of this kind, some of which my hon. friend has made. If they are not to be accepted as setting out the problems which were investigated, at great cost to the Canadian taxpayers, then I think we should discontinue commissions and all that sort of thing. The late Norman Rogers set out in great detail the fact that since coming into confederation Nova Scotia lost 202 industries to central Canada. At the time of confederation the maritime provinces were the most prosperous part of Canada. That was recognized at the time, and the fathers of confederation granted certain concessions as of right and gave certain guarantees to the people of the maritimes. They recognized that in bringing about confederation they were setting a new base, and that in doing so they were going to disturb and uproot the economy of that part of the country in order to expand the economy of the central part of Canada and ultimately link all the provinces under one federal charter.
There can be no question about the loss of industry by the maritimes to central Canada. I am not quarrelling with that. That has happened; it is past history. But when my hon. friend tries to ignore the developments of the past fifty years and turn back to the people of the maritimes themselves responsibility for the condition in which they find themselves, I think that is unfair. Perhaps one of the principal reasons for that attitude in central Canada and particularly in the federal government over the years is that so many men have been sent to this house tied to the tail of the machine that has ruled this country for the last fifty years to the detriment of everything east of Montreal. They were men who neglected to face facts,
The Budget-Mr. Gillis who failed to fight for the part of the country from which they came, who sat complacently in this house and either said nothing or gave an erroneous impression by statements such as we heard this evening. If my hon. friend tries to create the impression that all the industry we have centralized in this part of the country today was created by private enterprise, that impression is completely wrong. I have sat in this house since 1940.
I watched the development of our defence program in that year. At that time, when billions of dollars of the taxpayers' money was given to industries across this country, with about 85 per cent of it spent in these two provinces for the creation of new plants and the expansion of old plants for war industry, I rose in my place and protested. That development and expansion resulted from the investment of money by the federal government. I argued then that our defence planning should be carried on in such a way that the effort would be distributed equally across the country on the basis of population.
That is not very much to ask. In Nova Scotia we have about 4 per cent of the population of Canada. We have 2 per cent of the gross production in terms of dollar value. If we had our share-and surely it is not asking too much to merely ask for your share-we should have at least 2 per cent more; and that 2 per cent added to the gross production of that province at this time would make a tremendous difference. But my hon. friend is not prepared to ask for that. He is satisfied with things as they are. I am not. The defence planning in the last war was completely wrong; and the present defence planning is wrong again.
Several times in this house I have suggested decentralization; my hon. friend made reference to that this evening. I was not expressing my own opinion only; I read a good deal. I was expressing an opinion which is held by the leading public men of the province of Nova Scotia. I was expressing an opinion that has been expressed time and again by the newspapers of that province. I consider the Halifax Herald-Chronicle, for example, one of the best informed newspapers in Canada. I consider it one of the greatest instruments to fight for the rights of the maritimes; and in editorial after editorial that newspaper has stressed the importance of the decentralization of industry. Many people in this country and in the United States are doing that now, not only as an economic development but for the protection of industry in the event of war. While I am very much interested in it from the standpoint of equalizing the production of this country as between
2084	HOUSE OF
The Budget-Mr. Gillis province and province, to which I think we are entitled, I am particularly interested in it-


William F. Carroll: May I ask the hon. member how he is going to do that decentralizing?


Clarence Gillis: That is a simple question. You are starting now on a program that is going to cost the taxpayers of Canada a great deal of money.


William F. Carroll: I am not talking about war industries.


Clarence Gillis: I am. The hon. member talked about it a moment ago. That is why I am talking about it. I intended to talk about the sales tax and so forth. The federal government is now embarking on a program that is going to cost the taxpayers of Canada in the neighbourhood of $5 billion over the next three years. May I emphasize the fact that that is $5 billion of money belonging to the taxpayers of this country. That money is going to be spent for the purpose of creating a great deal of new industry for war purposes. Instead of further loading up the province of Quebec and the province of Ontario, where you have approximately 82 per cent of the productive capacity of the country centralized today, what is the matter with locating some of the plants that are going to make shells, ammunition and that kind of thing down in a part of the country where you already have your steel, iron ore, unemployment and all that kind of thing? It should be done. What is the matter with locating your new plants for production purposes, as related to the defence program, in parts of the country other than those where you have 82 per cent of them today? If there is another war, it is going to be an atomic war. If that kind of a war comes, decentralization will be desirable; and I would point out that most of the people who are making public statements today with regard to defence matters, both in Canada and in the United States, have made statements a good many times in the last couple of months pointing out the desirability of decentralization of your war plants at least. Now that we are going to spend $5 billion of the taxpayers' money, there is no reason why the federal government should not plan that production so as to scatter it across the country and thus make for a greater equalization of the defence expenditure and, of course, for the protection of industry in the event of an atomic war.
That is something that was not done in the last war. It should be done at this time. I suggest to the government, as I have time and time again previously, that the plants we are building now should be built and owned in 

such a way that they can be turned over to civilian production for peacetime use if and when the war was over. I think that the thing was handled wrongly in the last war. For example, a plate mill was built down at Sydney, Nova Scotia. I am going to stick to maritime problems because my hon. friend did so. That plate mill was built on land that was owned by the Dominion Steel and Coal Corporation. When the war finished, you had a new, modern, up-to-date mill with all kinds of markets in this country for the plate it _ was producing. The federal government said, "We have gone into shipbuilding. We do not need that plate any more."
We were taking it in our own yards. Dominion Steel and Coal Corporation did not want to operate it; it would run in competition with their mill somewhere else. Therefore you were in this position. You could not sell it. Dosco owned the land. If someone wanted to buy it, they would have to move it off that site. If they moved it off that site, it was difficult to find another one. There was a firm in the United States that I think would have bought that mill; at least I talked to them about it. They said, "if we move it, and if we can find a site, will Dosco supply us with raw materials?" The answer was "No raw materials." That is a fairly highhanded way of handling the resources that they have leased from the Newfoundland government, such as iron ore and so forth. That is an>
example of how your defence planning was done with regard to building plant and equipment in the last war. It should not be done in that way this time.
The main point I want to make about the decentralization of industry is that now is the time to think about it, when you are creating new plants and new equipment. We should benefit by the mistakes of the last war.
My hon. friend is all in favour of that St. Lawrence waterways development. That is another project that is going to cripple the maritimes further, and it is going to cripple them in this way. I want to remind the house for a moment of the statement that my hon. friend made to the effect that the government is doing a wonderful job, that they have loaned Dominion Steel and Coal Corporation $7,500,000 for the purpose of a mechanization program that will cheapen production, and that kind of stuff. You should go down and take a look at the equipment they are installing. I did so. I saw it first hand. May I say that I would not want to work under the conditions under which the miners are compelled to work today.
But the point I want to make is this. While the government have made a $7,500,000

investment in that mechanization program, they are not taking a long-range view when they support the idea of developing the St. Lawrence waterways because that is a project which, if completed, will rout the Nova Scotia mining industry out of the Quebec and Montreal market, the only market they have today. As far as the St. Lawrence waterways project is concerned,
I am convinced that it is for one purpose namely, the development of cheap power over in the United States; and the Canadian government is going to spend a great deal of the money of the taxpayers of Canada in giving the United States cheap power. But it will serve the purpose of providing a water route in to the Montreal market, with coal for the American operators that they have not today. That is point number one. It is going to offset the investment the government is making in the Nova Scotia industry. In the second place, in connection with that industry in which my hon. friend is so proud that the government has an investment, may I say that they have more than an investment. They make subsidies and that kind of thing-payments which, in the course of the year, run into millions of dollars. But this is an investment on which they should expect a return.
The government is also giving to a pipe line company the right to pipe natural gas from Alberta clean down into Montreal and the city of Quebec. When natural gas is available it will not only heat the homes but it can be supplied to any industry that is being supplied with coal today in that region. It will be much cheaper than coal, much cleaner, and it will do the same job. The only industry in which you cannot use natural gas is the basic steel industry; you still must have coal and coke in order to make steel. But in any other industry in that Quebec and Montreal market, where approximately 2,500,000 tons of coal from Nova Scotia are now sold, gas may be used. But besides investing in that coal industry, to mechanize it and cheapen production, the government are piping natural gas down there, through an American company; they are giving to outside people a franchise to come in and exploit the natural resources of the Dominion of Canada, in perpetuity, for all time; there is no return of them. That is going to offset, in my opinion, the investment the government is making in the industry at this time.
I sat on a committee which met this afternoon, and I heard the president of the Canadian National Railways say that they had under way a program of shortly putting ten diesel engines on the road from Halifax to Montreal in order to take the heavy freight hauls. That again is replacing coal. While
The Budget-Mr. Gillis the government, out of the goodness of their hearts, will loan the Dominion Steel and Coal Corporation $7,500,000 to develop that coal industry, at the same time they are granting to outside capital franchises to pipe natural resources into that section of' the country. That has as its ultimate end the replacement of that industry in its only economic market. Railways operated by the government are scrapping that market, and my hon. friend should not feel so good about the whole thing; because while they may be doing one thing which looks as if it might help, there are many other developments in that section of the country which offset the things that my hon. friend thinks the government is doing.
My hon. friend made one remark with which I partially agree. He said that the Minister of Resources and Development (Mr. Winters) was a pretty good fellow. I agree with that. I think he is one of the best men in the house. There are many things he would do if he could. My hon. friend said that the minister has done many things in Nova Scotia. I cannot see what they are. He has tried to do many things, but I believe he has been prevented from doing some of the things that he would do if there were more men like himself in the cabinet. I cannot see where he has succeeded so far in doing very much. He had a good housing program, but that was split up and stopped on him, and so forth and so on. I just wanted to make these few remarks, Mr. Speaker, because I did not want the impression created that everything was so fine in the maritimes.
There is no future for young people in that province, and nobody knows it better than my hon. friend.


William F. Carroll: I do not know that.


Clarence Gillis: The hon. member knows that for the last fifty years, according to the figures compiled by the dominion bureau of statistics, we have been sending 15,000 young people from the maritimes to the United States every year, and that is especially true of the last thirty years.


William F. Carroll: No, no.


Clarence Gillis: The hon. member should dig out the figures.


William F. Carroll: No.


Clarence Gillis: That is absolutely right.


William F. Carroll: Not 3,000 people have left the maritimes for the United States in the last five years.


Clarence Gillis: The hon. member does not look at the statistics. For the last few years we did) have a little bit of a program, in that
2086	HOUSE OF
The Budget-Mr. Gillis we have been sending a few young people into the province of Ontario, but they gradually went back home, and many of them are over in the United States today. That kind of development in this country is not good enough.
I might say, Mr. Speaker, that these young people are the citizens of tomorrow. They are young people for whom we have made investments in schools and universities. We have put them through school, because the average young person today is not leaving school to go to work; there is no work for him and he gets the best education possible. I will say this for that province: its educational standards are as high as any in Canada. Perhaps as much money is spent per capita on education in that province as in any other part of Canada. After that boy or girl is educated he or she has to get out of that part of the country in order to secure employment. The only thing that we have been exporting to other countries for the last twenty-five years is our young people. I am sure my hon. friend knows that. We are slowly but surely developing into a province of old people. The highest percentage of old age pensioners in the whole Dominion of Canada is in Nova Scotia. There is no work for the young; there is no employment for a man over forty years of age. Ten per cent of the working population of the area from which my hon. friend comes is unemployed at the present time; that is the registered unemployed in that area. Those are official figures of two weeks ago released by the Sydney office of the employment service. That is for the whole island of Cape Breton.
I know he has received letters from his own section recently, and so have I, to the effect that there is a possible chance of the marketing of coal from the Inverness mine being lost completely because of the dieseli-zation of the Canadian National Railways between Halifax and Montreal. Things are not so good, even in his own riding. There is a bad employment problem there, and it is static. Nothing is being done to cure it. While you may have about a four per cent unemployment problem for your working population across Canada, actually in that area it is ten per cent. The experts tell you when it gets over five per cent you have to do something about it because it is dangerous. If it were on a national scale you would say it was dangerous, and this house would be raising a lot of noise in order to have something done about it. Last year, when it was around six per cent, this house was passing supplementary benefits under the Unemployment Insurance Act and doing something about it on a national scale. 

I say emphatically that it is just as important to the people affected in that community as it was to the whole of Canada when the unemployed figures were up over six per cent. It is just as important to that section of the country that something be done there in order to relieve that unemployment problem because it has reached dangerous proportions.
Before my time is up, Mr. Speaker, I should like to say a little about the budget.' I know you have been patient and very lenient. I know you can discuss anything in the budget debate, but I generally like to be relevant to the subject matter before the house. It is not often that I get off on tangents unless somebody provokes me.
In regard to the budget itself I should like to say that I was disappointed. I think the main question that faces the Canadian people today is the question of inflavion. It is one of the most disturbing factors in our whole economy.
During the last couple of weeks, before the budget was presented, labour delegations came to Ottawa and met with the cabinet. They were sent away; they were told that the government did not intend to do anything at all at this time in regard to price controls or matters of that kind. But the Prime Minister (Mr. St. Laurent) did suggest that when the Minister of Finance brought down his budget there would be measures in it that would assist in overcoming any further inflation. That statement was published in the press as having been made by the Prime Minister to the Canadian Congress of Labour, the Catholic Federation and the American Federation of Labour. These bodies represent a large section of the Canadian people. But the important thing to remember is that they represent the industrial workers. These are the people who are going to work in the plants, in the mines and in our defence industries.
Our main problem of course is to build up adequate defences to meet any emergency that might exist in the future. One of the first things that we should have in mind is to try to create an atmosphere of confidence in the minds of those who are going to produce the sinews of war. They should at least have the assurance that the government is doing everything it can to protect the workers on whom we depend so much. Do not forget this; it is on discontent, lack of confidence and lack of faith in our own institutions that the people whom we may be obliged to fight some day build their machinery. I think the government was ill advised at this time in taking the stand that

we are going to wait to see how the control system works out in the United States. I do not think myself that that is good statesmanship to inspire confidence, but we did not wait in 1941. We established price controls in this country a year ahead of the United States. The federal government in Canada pioneered in that field, and they made controls work. And if any lessons were learned about price controls, then it was lessons the Canadian government taught the Americans for at least a year prior to the adoption of controls in that country.
There can be no doubt about the saving to the Canadian people. The man who made the hardest fight for controls was the then minister of finance, Mr. Ilsley, who told us in 1945 that the Canadian people saved two and a half billion dollars. From a business standpoint alone it was a good investment for the people of Canada.
We had all that experience; we had it during all that time. I think the government was ill advised in saying that it was going to wait for the United States. We are told that the budget included measures that were going to prevent inflation, or to assist in overcoming inflation. I cannot see anything in the budget that is going to assist in overcoming inflation. The government has proposed one new device, but nobody knows how it will work. I am referring to deferred depreciation for a period of four years. They hope there may be something in that.
Actually there are in the budget measures which will add to the spiral of inflation. I looked it over rather quickly and my reaction to it is that the sales tax, which was discussed thoroughly by several hon. members, but particularly by the hon. member for Rose-town-Biggar (Mr. Coldwell), adds to the cost of living. While it sounds very easy and very simple to add 2 per cent, actually it works out at from 13 to 24 per cent. The sales tax is applied in this way: the manufacturer charges it, and passes it on to the wholesaler. The wholesaler takes the manufacturer's 10 per cent tax and adds that on before he marks up his profit. Then it is passed1 on to the retailer who takes his 20 per cent, and charges that up as cost to himself for that article. He adds his mark-up on top of that and then adds the other 10 per cent to the sales tax.
As one follows it through he will find that it works out anywhere from 13 to 24 per cent. That is a tax that will hit a great many commodities in this country. It is an added expense to every householder or anyone who buys anything. How can the government say it is going to help overcome inflation by a
The Budget-Mr. Gillis measure such as that when they have deliberately added to the cost of living, which ultimately will shove up the spiral of inflation?


Edmund Davie Fulton: And profits.


Clarence Gillis: There is no doubt about it that it will add to profit, too.
Secondly, the government did not increase the tax on beer or liquor. I think that was very shortsighted-and, mind you, I am not a teetotaler, I do not say this because I am a temperance man; but I do believe that anyone who has the money to buy a bottle of Scotch or a couple of bottles of rye, or who can afford to drink some beer, would not kick very much if a dollar or so per gallon were added to the cost of the liquor. It is something one does not have to buy, and I think a tax of that kind would have been preferable to the tax on washing machines, refrigerators and other equipment of that kind. These things are not luxuries any more; they are essentials in every household. There are many young people who would want to get married and equip their homes, and those are the first things they will have to buy.
But under these conditions they are not able to buy the stove, the refrigerator or the washing machine they want. Those three articles are considered necessities in any household today. If the tax had been put on liquor-and a good stiff one-these essential commodities could have remained free and the cost of living would have been kept down to some extent for people who either had to furnish new homes or replace worn-out equipment.
Then, let me say this about profits: that the hon. member for Kamloops (Mr. Fulton), owing to his close association with this group, has gradually begun to think as we do.


Edmund Davie Fulton: Mr. Speaker, on a question
of privilege: while my admiration for my hon. friend's character and ability is unbounded, unfortunately I cannot say that I admire his policies.


Clarence Gillis: You see, Mr. Speaker, he has
just finished prompting me into talking about profits; and I heard him arguing today most venomously-


Edmund Davie Fulton: Venomously?


Clarence Gillis: -for pipe lines carrying oil to British Columbia, and stating that they should be common carriers, developed by the government.


Edmund Davie Fulton: Common carriers, but not
developed by the government-the two things are different.

The Budget-Mr. Gillis


Clarence Gillis: He is a little young yet;
perhaps when he is as old as I am he will be worse than I am. However, on the question of profits, let me say that in my view the present profits structure is one of the main causes of inflation in Canada today. Press statements being released-and I have a lot of them here-show that in company after company profits are up by 300 per cent or 400 per cent. When I read these balance sheets in the papers I am really ashamed of the companies. For instance, Westinghouse nets $5,809,000, and all that kind of thing.
When one takes a look at those profits his only conclusion can be that the manufacturer is charging a lot more for everything today than is necessary. That, in turn, is passed on to the wholesaler and the retailer anjl the consumer has to take those skyrocketing prices, and all because there is too much profit.
All right, we are told the government has not the power to control it, and that they do not want to. I am suggesting that if the government were to take a look at the profits of the bigger corporations today they would realize that there is plenty of room for a redistribution of income to be spread among salaries, wages and subsidies to hold down the prices of essentials, and to increase the standard of living of those who produce. This is obvious from the balance sheets appearing in the press from day to day, and every day.
From hon. members opposite, and those who sit to my right, the argument in the past has been that the excess profits tax tended to waste and extravagance in management. That is not so. I remember that when I came to the house in 1940 the standard of living for the average worker was pretty low. Salaries and wages were low when compared with those in the United States. There were no welfare schemes in industry, and no pensions paid.
When the excess profits tax went on, what happened? Immediately employers in this country smartened up, and said, "Well, if we are going to give it to the government in taxes, we might as well revise wage schedules". I remember how easy it was for unions to approach employers and get increases in wages. That was one thing. But by an upward revision of salaries and wages, largely promoted in my opinion by that excess profits tax, the standard of living of all the people of Canada was improved enormously. That money was not wasted.
Secondly, many companies established pension and medical schemes on a contributory basis for their employees. A lot of that

money that is now going into excess profits was diverted into those channels and as a result we had a fairly comprehensive picture of pension and welfare schemes in most of our industrial and business establishments. This was due to the fact that the federal government told these companies that if they earned over a certain percentage of profits it would come back to them in excess profits taxes, but certain things were exempt from that tax.
I see, Mr. Speaker, you are looking at me so I assume my time must be drawing to a close. The argument that excess profits taxes will promote waste and extravagance in business is not true. I contend that because of that tax things were done in industry and business during the last war which created an upward swing in the standard of living of the Canadian people. If that had been done, if the government had established price controls on essentials and used some of the money going into excess profits for the purpose of subsidizing, they would have established some confidence in the minds of the Canadian people.
Another thing that should be done by the government is to have a conference with the primary producers of this country. This has been suggested many times. There should be representatives from the major labour bodies who would sit in with representatives of the primary producers and the government to work out a wage and price base or stabilization program for industry and agriculture. In that way we would be drawing into our national defence program the primary producers and the industrial workers of this country. They would be given a say in planning their future and it would inspire confidence and ensure the government of getting maximum production and understanding from those who produce the wealth of the country.
I am sorry that I was provoked into making a speech which I did not intend to make and I shall just have to leave unsaid a lot of things I should like to say about the economic and financial aspects of the budget.


Mr. J. A. Ross (Souris):: Mr. Speaker, I agree with all that the hon. member for Cape Breton South (Mr. Gillis) has said about the decentralization of industry in this country. He and I have argued this matter on several occasions in the past. There is much that should be done in that respect. We have pointed out the difficulties which our respective provinces labour under.
I want to endorse all that the hon. member for Lanark (Mr. Blair) said so well this evening about dairying and the problems

of the dairy producers, principally the cheese producers. The hon. member must have put a lot of study into his speech. He gave us many facts that will be valuable through being in Hansard.
We have been hearing many medical members this evening expound on behalf of agriculture, and that is all to the good. I think the hon. member for Regina City (Mr. McCusker) gave us a fine discourse on the South Saskatchewan irrigation project. I have been rather conversant with this matter. I endorse the congratulations he offered to Mr. L. B. Thomson, superintendent of the Prairie Farm Rehabilitation Act administration. I knew this gentleman before I came to Ottawa because it was my privilege to serve on an advisory committee of the P.F.R.A. before coming down here. At that time Mr. Thomson was working in another capacity. I am sure that he will make a splendid head of the department he has now taken over.
Those who have been here for some years will remember the many speeches made by the late John R. MacNicol with regard to the South Saskatchewan irrigation project. The late Mr. MacNicol represented a Toronto riding but hon. members will recall how he used to spend his vacations travelling throughout the country studying our natural resources. He was very keen about this South Saskatchewan project. 1 have talked with many people from the prairies, especially from Saskatchewan, and irrespective of politics they have told me that they thought the project should be named the John R. MacNicol irrigation project. Those in charge of this matter for the government should take the advice of these residents of the prairies, many of them staunch supporters of the government, who are asking that this tribute be paid to the late Mr. MacNicol.
I realize that it is too much to hope for, that every citizen in Canada would read the speech delivered by the Minister of Finance (Mr. Abbott). I compliment the minister upon his manner of delivery. He does his job well. I do not agree with much of the material contained in the budget, but I wish all the citizens of this country would read the detailed speech he delivered. He is a kindly member of this government. Then I wish the same people would read the detailed criticisms which were so well advanced this afternoon by the hon. member for Greenwood (Mr. Macdonnell). If all the citizens of this country would read and study both those speeches I think they would get a different understanding of what these tax proposals will mean to them in the days that lie ahead.
The Budget-Mr. J. A. Ross
I was pleased to hear the hon. member for Greenwood ask the Minister of Finance and the government rather pointedly not to persist in their proposal to increase the sales tax from eight to ten per cent. I have always been greatly opposed to sales taxes of any kind because I do not like indirect or hidden taxes. I think it is an unfair tax. As has been so well pointed out by several speakers this afternoon, by the time this tax is paid by the consumer it has been pyramided until it is several times the original eight per cent, or ten per cent as it is now. It is difficult to estimate what the final tax is after it has been pyramided from the wholesaler right through to the consumer.
It is a vicious type of tax and certainly it will not assist those who are trying to fight the cost of living and finding it most difficult in these times. As was pointed out by the hon. member for Greenwood, the sales tax should be repealed because his surplus will probably be more than the revenue from the increase. Therefore he should withdraw that proposal. In this afternoon's press is an article indicating that the budget has boosted gasoline prices. The article points out that Imperial Oil Limited has decided to increase the prices of gasoline and diesel fuel because of the proposed sales tax increase. I do not think I need tell anyone here that that will add to the cost of production of the farmers of this country, as well as of many other people. That is just one of the items, as already pointed out. I think it would be an unfair increase and an unfair tax.
With respect to the tax of 15 per cent on electric stoves, refrigerators and washing machines, as was pointed out by speakers this afternoon these are now considered necessities of life throughout this country. I am sure that this tax will be very much disliked in the province of Manitoba from which I come because a great hydro expansion is taking place in the rural areas at the present time. After the type of life that our farm people have been accustomed to, and having in mind that these things are now considered necessities of life, the extra 15 per cent tax is going to be rather a hardship on very many people. I think it is most unfair.
The hon. member for Cape Breton South (Mr. Gillis) wonders why some additional tax was not imposed on beer or liquor. Personally I am bound to agree with him. I do not think anybody will accuse me of being a crank about these things. However, a letter appeared in a paper the other day written by a bride to be. She was wondering when liquor and beer had become essentials of life and why electrical stoves, refrigerators

The Budget-Mr. J. A. Ross and washing machines were at the same time considered luxuries.


Mr. Ward:: What is the tax on liquor?


James Arthur Ross: I cannot tell you exactly what the tax is now. It probably is fairly heavy but I can tell my hon. friend that the taxes on liquor so far have not in any way decreased consumption in this country. I think he will agree as to that. In fact, if he asks me about that I will tell him what happened in our own province. Coming from Manitoba, he probably knows as much about it as I do. At the time of the baby budget last September an additional tax was imposed on liquor and on hops and so on for beer. I forget the exact figure but it amounted to one and a fraction cents on a bottle of beer. Notwithstanding that, the provincial government imposed a tax of 4 cents on a bottle of beer to take care of that. That is a fact. I think that was a pretty heavy tax but following that the consumption of beer increased in the province of Manitoba. I think it is a fair assumption that no harm would have been done by imposing extra taxes on alcoholic beverages at this time, and I am not one who advocates taxing anything when it is not necessary. If one has to make a decision on these matters, I think it would have been beneficial to young people attempting to set themselves up in their own homes, as well as to many other people in this country, if a tax had not been imposed on articles which are so essential in setting up a home. Those of us who might want to buy liquor or to have the authority to buy it-


Mr. Slick:: Or get married.


James Arthur Ross: Yes-would not mind having to pay an extra tax there. However, that is just a personal observation. My colleague, the financial critic of our party, this afternoon referred to an article appearing on the editorial page of the Winnipeg Free Press of Thursday, April 12. I want to quote a portion of the article again. It reads:
But if the underlying truths of this budget are examined it will be seen that the government's courage has outstripped its sense of reality. The budget in fact is a contradiction. Mr. Abbott stated the issue with clarity but he did not face it. "Two great issues face the world today," he said. "They are the pursuit of peace and the control of inflation." The budget figures document that statement to the hilt. But the budget itself contains no answer. Of the total outlay of 3,700 million dollars, expenditures on defence will be $1,662 million. This represents the pursuit of peace and is not to be criticized. The balance of $2,036 million represents the other of Mr. Abbott's great issues-the control of inflation. This vast outlay is for non-defence, for government services of one kind or another. How great it is may be gauged by the fact that in 1945-46, the first year of peace, the corresponding expenditure was only 1,062 million dollars.

There is more to the article. It is quite lengthy. I think any hon,. member would do well to read it because it sets out the matter very well, and certainly points out what little help the budget will be to those who find the cost of living burdensome at this time. In fact the whole budget will greatly increase the difficulties faced by the people today. It does nothing to assist them. I have heard references to my right about the proposed provincial sales tax. In that respect 1 was very disappointed that just a few days ago the province of Manitoba saw fit to pass enabling legislation which would give them power to impose a provincial sales tax of 3 per cent. True enough, the attorney general and the premier pointed out that they had no intention of imposing that tax in the province but that it was enabling legislation to assist other provinces and the agreement to be made later with the federal authorities if such becomes a fact. Nevertheless I was is-appointed that our provincial government would even pass that type of legislation.


Mr. Garson:: I am sure my hon. friend wishes to speak accurately in this connection.


James Arthur Ross: That is correct.


Stuart Sinclair Garson: Is he not referring to a resolution which was passed by the Manitoba legislature approving of a sales tax constitutional amendment? I would point out to him that resolution, is not in any sense enabling legislation, and that Premier Campbell has announced that in fact he has no intention of using that power even if it were granted.


James Arthur Ross: Mr. Speaker, I have already said that both Premier Campbell and the attorney general had stated that they had no intention of using that power.


Stuart Sinclair Garson: It is not enabling legislation. It is just a resolution approving of the constitutional amendment in question.


James Arthur Ross: That is true, a constitutional amendment. I understood from the discussions arising from questions put by other members to the Minister of Justice (Mr. Garson) that these resolutions were required from the various provinces before the amendment could be undertaken. Am I wrong there?


Stuart Sinclair Garson: You are wrong in that also.


James Arthur Ross: I still dislike very much the fact that our provincial government has passed such a resolution, and it was by a very close vote. Now that the Minister of Justice has raised the question, I have an editorial here dealing with the federal sales tax as well as the matter to which we have been referring. A short while ago a number

of editorials appeared in many papers across the country. I think the minister probably will have read them. The one to which I wish to refer appeared in the Globe and Mail of Tuesday, March 6, 1951, and its heading is "Garson vs. Garson". The editorial reads:
Justice Minister Garson was in a placatory mood last week when he addressed the Montreal reform club. Speaking of the proposed constitutional amendment, which would enable the provinces to finance old age pensions by means of a turnover tax on gross retail sales, he denied allegations that the federal government was trying to foist it on any provincial government. It was completely up to the provinces, he said. Some would wish to impose such a tax, some would not. Of those which were anxious to enter the field of indirect taxation (now barred to them by the B.N.A. Act) he declared: "They have good reasons . . . Over the recent years the demands for provincial and municipal services, and the costs of satisfying such demands have both increased very greatly."
It is curious to find Mr. Garson defending the general idea of indirect taxation by provincial governments. Just a few years ago, when he was premier of Manitoba, he was frankly hostile to indirect taxation by any authority. On August 7, 1945, he told the dominion-provincial conference:
"Direct taxes are imposed upon the basis of known ability to pay. It is therefore a progressive tax. Indirect taxes fall on the poor with greater severity than on the wealthy. The indirect tax . . . is proportionately more to the man whose income is small than to the man whose income is large. It is therefore a regressive tax."
In another speech given that day, he warned the federal government not to finance its postwar program with "indirect taxes which retard business, minimize consumption and bear with unusual severity upon the poor." The same appeal is to be found in the opening paragraphs of the province of Manitoba's submission to the conference, presented January 26, 1946.
By April 30 that year Mr. Garson was denouncing the federal government for its extensive use of indirect taxes during the depression years. "In the 1930's," he said, "it was the undue reliance upon indirect taxes on staple articles of everyday use which so seriously curtailed the quantity of goods which could be purchased by families with low incomes . . ."
The Budget-Mr. J. A. Ross
In the same speech, he charged that the federal government's "business-destroying, depression-creating" tax structure, based too heavily upon indirect taxes, had "bankrupted marginal enterprises by taxing costs regardless of whether such enterprises were making profits, and thereby discouraged enterprise, investment and employment."
There is nothing wrong with these arguments. This newspaper supports them, and because it supports them, opposes a provincial turnover tax as a means of financing pensions or anything else. Like most indirect taxes, it is unjust, restrictive and regressive. Premier Garson saw that in 1945-6. Justice Minister Garson doesn't see it in 1951-or maybe he prefers not to see it: whichever is unimportant.


Leonard T. Stick: The same man?


James Arthur Ross: Yes, the same man in a different capacity.
The important fact is that Mr. Garson is now looking for an easy way out of the federal government's difficulties. If it can fob off the provinces with a shoddy tax deal, it will feel that it has managed to shelve the fundamental issues of welfare, reform and jurisdiction for an indefinite time, perhaps for a generation.
The people of Canada do not have to accept this shabby evasion of responsibility. They can take their stand simply by instructing their member of parliament to vote against the constitutional amendment.
Now, Mr. Speaker, I come to another phase with which I should like to deal, so if I may I will leave this where it is and with your permission move the adjournment of the debate and ask you to call it eleven o'clock.
Motion agreed to and debate adjourned.



BUSINESS OF THE HOUSE

Mr. Fournier (Hull) moved: the adjournment of the house.
He said: Tomorrow we will continue this debate.
Motion agreed to and the house adjourned at 10:55 p.m.

Tuesday, April 17, 1951